Coordinating virtual power plants with the transmission system via electricity market considering heterogeneous risk preferences

Abstract

A novel coordination method between the transmission network and virtual power plants (VPPs) is developed in this paper. Instead of solving a system-wide stochastic optimization by the transmission system operator (TSO) in a uniform manner with the same risk-averse level, in the proposed method, each VPP formulates its bids in energy and reserve markets with its own tradeoff between its risk and expected profit. At the TSO level, the market-clearing model is still deterministic and requires no iterations among TSO and VPPs. Thereby, computation burdens and privacy concerns can be reduced. The role of VPPs can be extended to wind farm or solar power plant owners. Simulations show the effectiveness of the proposed mechanism in the energy and reserve market. The importance of considering different risk attitudes of VPPs is also validated.

Keywords

• Virtual power plant
• electricity market
• renewable energy source
• risk management
• parametric programming