Network and Market-Aware Bidding to Maximize Local RES Usage and Minimize Cost in Energy Islands with Weak Grid Connections

Abstract

The increasing renewable energy sources RES penetration in today’s energy islands and rural energy communities with weak grid connections is expected to incur severe distribution network stability problems (i.e., congestion, voltage issues). Tackling these problems is even more challenging since RES spillage minimization and energy cost minimization for the local energy community are set as major pre-requisites. In this paper, we consider a Microgrid Operator (MGO) that: (i) gradually decides the optimal mix of its RES and flexibility assets’ (FlexAsset) sizing, siting and operation, (ii) respects the physical distribution network constraints in high RES penetration contexts, and (iii) is able to bid strategically in the existing day-ahead energy market. We model this problem as a Stackelberg game, expressed as a Mathematical Problem with Equilibrium Constraints (MPEC), which is finally transformed into a tractable Mixed Integer Linear Program (MILP). The performance evaluation results show that the MGO can lower its costs when bidding strategically, while the coordinated planning and scheduling of its FlexAssets result in higher RES utilization, as well as distribution network aware and cost-effective RES and FlexAsset operation.