Virtual power plant (VPP) concept was developed to integrate distributed energy resources (DERs) into the grid in order that they are seen as a single power plant by the market and power system operator. Therefore, VPPs are faced with optimal bidding, and identifying arbitrage opportunities in a market environment. In this study, the authors present an arbitrage strategy for VPPs by participating in energy and ancillary service (i.e. spinning reserve and reactive power services) markets. On the basis of a security-constrained price-based unit commitment, their proposed model maximises VPP's profit (revenue minus costs) considering arbitrage opportunities. The supply–demand balancing, transmission network topology and security constraints are considered to ensure reliable operation of VPP. The mathematical model is a mixed-integer non-linear optimisation problem with inter-temporal constraints, and solved by mixed-integer non-linear programming. The result is a single optimal bidding profile and a schedule for managing active and reactive power under participating in the markets. These profile and schedule consider the DERs and network constraints simultaneously, and explore arbitrage opportunities of VPP. Results pertaining to an illustrative example and a case study are discussed.

References

1. 1)
  - 24. Rabiee, A., Shayanfar, H.A., Amjady, N.: ‘Coupled energy and reactive power market clearing considering power system security’, Energy Convers. Manage., 2009, 50, pp. 907–915 (doi: 10.1016/j.enconman.2008.12.026).
2. 2)
  - 21. Peik-herfeh, M., Seifi, H., Sheikh-El-Eslami, M.: ‘Two-stage approach for optimal dispatch of distributed energy resources in distribution networks considering virtual power plant concept’, Eur. Trans. Electr. Power Syst. Res., 2012, 24, (1), pp. 43–63.
3. 3)
  - 19. Mashhour, E., Moghaddas-Tafreshi, S.M.: ‘Bidding strategy of virtual power plant for participating in energy and spinning reserve markets – part II: numerical analysis’, IEEE Trans. Power Syst., 2011, 26, (2), pp. 957–964 (doi: 10.1109/TPWRS.2010.2070883).
4. 4)
  - 2. Asmus, P.: ‘Microgrids, virtual power plants and our distributed energy future’, Electr. J., 2010, 23, (10), pp. 72–82 (doi: 10.1016/j.tej.2010.11.001).
5. 5)
  - 31. Li, T., Shahidehpour, M.: ‘Risk-constrained generation asset arbitrage in power systems’, IEEE Trans. Power Syst., 2007, 22, (3), pp. 1330–1339 (doi: 10.1109/TPWRS.2007.901753).
6. 6)
  - 11. You, S., Traeholt, C., Poulsen, B.: ‘A market-based virtual power plant’. Int. Conf. on Clean Electrical Power, Italy, 2009, pp. 460–465.
7. 7)
  - 26. Braun, M.: ‘Technological control capabilities of DER to provide future ancillary services’, Int. J. Distrib. Energy Res., 2007, 3, (3), pp. 191–206.
8. 8)
  - 14. Braun, Ph., Swierczynski, M., Diosi, R., et al: ‘Optimizing a hybrid energy storage system for a virtual power plant for improved wind power generation: a case study for denmark’. Proc. Sixth Int. Renewable Energy Storage Conf. and Exhibition, Germany, 2011.
9. 9)
  - 29. Liu, M.B., Cañizares, C.A., Huang, W.: ‘Reactive power and voltage control in distribution systems with limited switching operations’, IEEE Trans. Power Syst., 2009, 24, (4), pp. 889–899 (doi: 10.1109/TPWRS.2009.2016362).
10. 10)
  - 17. Nezamabadi, H., Nezamabadi, P., Setayeshnazar, M., et al: ‘Participation of virtual power plants in energy market with optimal bidding based on Nash-SFE equilibrium strategy and considering interruptible load’. Third Conf. Thermal Power Plants, Iran, 2011, pp. 1–7.
11. 11)
  - 30. Shahidehpour, M., Li, T., Choi, J.: ‘Optimal generation asset arbitrage in electricity markets’, KIEE Int. Trans. Power Eng., 2005, 5-A, (4), pp. 311–321.
12. 12)
  - 6. Ruiz, N., Cobelo, I., Oyarzabal, J.: ‘A direct load control model for virtual power plant management’, IEEE Trans. Power Syst., 2009, 24, (2), pp. 959–966 (doi: 10.1109/TPWRS.2009.2016607).
13. 13)
  - 3. Strbac, G., Ramsay, Ch., Pudjianto, D.: ‘Integration of distributed generation into the UK power system’. DTI Centre for DG and Sustainable Electrical Energy, Imperial College London, 2007, pp. 1–7.
14. 14)
  - 4. Djapic, P., Ramsay, C., Pudjianto, D., et al: ‘Taking an active approach’, IEEE Power Energy Mag., 2007, 5, (4), pp. 68–77 (doi: 10.1109/MPAE.2007.376582).
15. 15)
  - 12. Sharpe, W., Alexander, G., Baily, J.: ‘Investments’ (Prentice-Hall, Indiana, 1990, 4th edn.).
16. 16)
  - 28. Braun, M.: ‘Provision of ancillary services by distributed generators’. PhD thesis, University of Kassel, 2008.
17. 17)
  - 34. ‘Generalized Algebraic Modeling Systems (GAMS)’. Available at http://www.gams.com.
18. 18)
  - 2. Setiawan, E.A.: ‘Concept and controllability of virtual power plant’. PhD thesis, University of Kassel, 2007.
19. 19)
  - 8. Braun, M., Strauss, P.: ‘A review on aggregation approaches of controllable distributed energy units in electrical power systems’, Int. J. Distrib. Energy Res., 2008, 4, (4), pp. 297–319.
20. 20)
  - 10. Rabiee, A., Shayanfar, H.A., Amjady, N.: ‘Reactive power pricing problems and a proposal for a competitive market’, IEEE Power Energy Mag., 2009, 7, pp. 18–32 (doi: 10.1109/MPE.2008.930483).
21. 21)
  - 14. Hedman, K.W., Ferris, M., O'Neill, R.P., et al: ‘Co-optimization of generation unit commitment and transmission switching with N–1 reliability’, IEEE Trans. Power Appl. Syst., 2010, 25, (2), pp. 1052–1063 (doi: 10.1109/TPWRS.2009.2037232).
22. 22)
  - 36. Available at https://www.ee.washington.edu/research/pstca/pf30/pg_tca30bus.htm.
23. 23)
  - 15. Peik-Herfeh, M., Seifi, H., Sheikh-El-Eslami, M.: ‘Decision making of a virtual power plant under uncertainties for bidding in a day-ahead market using point estimate method’, Int. J. Electr. Power Energy Syst., 2013, 44, (1), pp. 88–98 (doi: 10.1016/j.ijepes.2012.07.016).
24. 24)
  - 13. Shahidehpour, M., Yamin, H., Zuyi, L.: ‘Market operation in electric power systems’ (Wiley, New York, 2002, 1st edn.).
25. 25)
  - 32. Canizares, C.A., Bhattacharya, K., El-Samahy, I., et al: ‘Re-defining the reactive power dispatch problem in the context of competitive electricity markets’, IET Gener. Transm. Distrib., 2010, 4, (2), pp. 162–177 (doi: 10.1049/iet-gtd.2009.0099).
26. 26)
  - 10. Pandžić, H., Morales, J.M., Conejo, A.J., et al: ‘Offering model for a virtual power plant based on stochastic programming’, APPL. Energy, 2013, 105, pp. 282–292 (doi: 10.1016/j.apenergy.2012.12.077).
27. 27)
  - 4. Mashhour, E., Moghaddas-Tafreshi, S.M.: ‘Bidding strategy of virtual power plant for participating in energy and spinning reserve markets – part I: problem formulation’, IEEE Trans. Power Syst., 2011, 26, (2), pp. 949–956 (doi: 10.1109/TPWRS.2010.2070884).
28. 28)
  - 5. You, S.: ‘Developing virtual power plant for optimized distributed energy resources operation and integration’. PhD thesis, Technical University of Denmark, 2010.
29. 29)
  - 15. Vahidianasab, V., Jadid, S.: ‘Stochastic multiobjective self-scheduling of a power producer in joint energy and reserves markets’, Electr. Power Syst. Res., 2010, 80, (7), pp. 760–769 (doi: 10.1016/j.epsr.2009.11.007).
30. 30)
  - 1. Dielmann, K., Velden, K.: ‘Virtual power plants (VPPs) – a new perspective for energy generation?’. Proc. Ninth Int. Scientific Conf. of Students, 2003, pp. 18–20.
31. 31)
  - 7. Wille-Haussman, B., Erge, T., Wittwer, C.: ‘Decentralized optimization of cogeneration in virtual power plants’, Sol. Energy, 2010, 84, pp. 604–611 (doi: 10.1016/j.solener.2009.10.009).
32. 32)
  - 35. Wood, A.J., Wollenberg, B.: ‘Power generation, operation, and control’ (Wiley, New York, 1984, 1996, 2nd edn.).
33. 33)
  - 25. Madureira, A.G., Lopes, J.A.: ‘Ancillary services market framework for voltage control in distribution networks with microgrids’, Electr. Power Syst. Res., 2012, 86, pp. 1–7 (doi: 10.1016/j.epsr.2011.12.016).
34. 34)
  - 16. Nezamabadi, H., Nezamabadi, P., Setayeshnazar, M., et al: ‘Optimal bidding of virtual power plants via Nash_SFE equilibrium strategy’. The 26th Int. Power System Conf., Iran, 2011, pp. 1–7.
35. 35)
  - 9. Amjady, N., Aghaei, J., Shayanfar, H.A.: ‘Stochastic multiobjective market clearing of joint energy and reserves auctions ensuring power system security’, IEEE Trans. Power Syst., 2009, 24, (4), pp. 1841–1854 (doi: 10.1109/TPWRS.2009.2030364).
36. 36)
  - 11. Lopes, J.A., Hatziargyriou, N., Mutale, J., et al: ‘Integrating distributed generation into electric power systems: A review of drivers, challenges and opportunities’, Electr. Power Syst. Res., 2007, 77, (9), pp. 1189–1203 (doi: 10.1016/j.epsr.2006.08.016).

Arbitrage strategy of virtual power plants in energy, spinning reserve and reactive power markets

References

Related content