Study on Market-Based Trading Strategies for Biomass Power Generation Participation in Microgrid Systems

Weiwei Yu, Weiqing Wang () and Xiaozhu Li
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Weiwei Yu: Engineering Research Center for Renewable Energy Generation and Grid Integration, Ministry of Education, Xinjiang University, Urumqi 830017, China
Weiqing Wang: Engineering Research Center for Renewable Energy Generation and Grid Integration, Ministry of Education, Xinjiang University, Urumqi 830017, China
Xiaozhu Li: Engineering Research Center for Renewable Energy Generation and Grid Integration, Ministry of Education, Xinjiang University, Urumqi 830017, China

Energies, 2023, vol. 16, issue 23, 1-20

Abstract: The Chinese government places significant importance on biomass energy due to its renewable and environmentally friendly attributes. However, the high cost of power generation poses a considerable hurdle to its development. This study aims to address the challenges facing the profitability and sustainable development of biomass power generation after the gradual withdrawal of the Chinese government by proposing a day-ahead real-time market-based trading strategy. It is prompted by the incentives offered by the Chinese government for the ongoing power market reform. This strategy is developed for a microgrid system that integrates biomass power generation with other renewable energy sources. The principles followed by the microgrid system include self-generation and consumption, electricity surplus sales, and electricity shortfall procurement. During the day-ahead stage, peak and valley tariffs are decided by the microgrid operator to exert influence on the incentives of capacity providers in accordance with the load trends, while in the intraday stage, the supply-demand imbalance is resolved by the stored electricity. In the trading process, marginal production and marginal pricing are specified to ensure the minimum trading volume and price for capacity traders, ensuring their profitability. It is demonstrated in this study that the trading strategy presented is more effective than conventional fixed-price trading in making biomass power generation profitable and sustainable, even after the Chinese government subsidy is phased out. Moreover, the other participant in the microgrid system can boost their earnings when compared to generating power individually for trading.

Keywords: biomass power generation; microgrid system; trading strategy; cogeneration; sustainability (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2023
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