A bi-level approach for participation of hybrid transmission operating companies in the day-ahead market, considering energy storage systems

Abstract

This paper presents a new approach for participation strategy of Hybrid Transmission Operating Companies (HTOCs) in the day-ahead energy market. In this paper HTOC refers to private companies that have won physical transmission rights (PTR) and also own energy storage facilities. In the introduced hybrid structure, the HTOC can make profit in two different ways; first, through the flow of transmission lines (the MW-Mile transmission pricing method is used here); and second, through an optimum scheduling of its energy storage system. The optimum charge/discharge pattern of energy storage systems, evaluated in this paper, would also increase the MW-Mile profit of the company. The proposed method is a bi-level optimization model. In the upper level the profit of the HTOC is maximized and in the lower level the market clearing process of the independent system operator (ISO) has been modeled. The uncertain behavior of rival units is modeled using robust optimization (RO) method. The Karush-Kuhn-Tucker (KKT) optimality conditions are implemented to convert the proposed bi-level problem into its equivalent single-level problem. The Big-M method and the strong duality theorem (SDT) are used to linearize the proposed method. To demonstrate the performance of the introduced structure for HTOC, the proposed strategy has been implemented on a standard IEEE 9-bus and 57-bus test systems. The results show that HTOC can achieve a maximum guaranteed profit using storage resource (SR). It is also concluded that the presence of SR has not only increased HTOC's profit but also helped to make the structure more flexible against the uncertain parameters. In addition, the RO as a calculation risk method has been perfectly matched with the implementation of SR as a source of hedging uncertainties in managing the risk.