Are better combinations of DERs more profitable?: Combinatorial optimization for aggregation of DERs in wholesale electricity markets

Eo Jin Choi, Gab-Su Seo and Seung Wan Kim

Applied Energy, 2025, vol. 396, issue C, No S0306261925009948

Abstract: Recently, regulatory changes in various countries have enabled the participation of small-scale distributed energy resources (DERs) aggregated in virtual power plants (VPPs) in wholesale electricity markets. The inherent uncertainty and variability of resources comprising VPPs can lead to imbalances between forecasted and metered outputs, potentially resulting in the deficient settlement of generation under imbalance settlement rules. To address this challenge, it is essential to manage variability in the planning phase and uncertainty in the operation phase. Most current research focuses on managing forecasting errors in the operational phase, with insufficient attention given to the planning phase. To bridge this gap, this paper proposes an optimal combination strategy for DERs to maximize the market participation revenue of VPPs by proactively managing variability in the planning phase. To estimate the expected revenue, we conducted analyses for homogeneous and heterogeneous DERs using Monte Carlo simulations and genetic algorithms. Remarkably, the proposed method demonstrated approximately 8 % higher revenue compared to the neighboring group case when considering diversity in DER set configuration with equal proportions of photovoltaics and wind.

Keywords: Distributed energy resources; Monte carlo simulation; Virtual power plants; Electricity markets; Optimal combination (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1016/j.apenergy.2025.126264

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