With the developments of isolated microgrids (IMGs) and prosumers in remote areas, energy trading has become more significant in IMGs. On the other hand, the lack of an upstream network and the system's low inertia could endanger the secure operation of these networks. This paper presents a Micro-Market (µM) model for IMGs with the precise modeling of hierarchical control structure. To deal with the IMG's low inertia and high intermittency of renewable energy sources (RES), the proposed µM manages the active-reactive power and schedules sufficiently primary and secondary active reserves to preserve frequency in a predefined range. In addition, a bidirectional linearized AC power flow is established to schedule the reactive reserve and the proposed model is formulated as a two-stage stochastic mixed-integer linear problem (MILP) to maximize social welfare (SW) during the next 24 hours. To verify the ability of the proposed model, the µM is tested in an IMG based on a CIGRE medium-voltage benchmark system and different operational cases are simulated. The results showed that considering hierarchical control levels and technical issues of the IMG in the proposed model is a cost-effective manner to maximize the social welfare while the secure operation of the IMG is ensured.
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