Aggregated Distribution Company's Profit Model in Hourly Ahead Energy and Reserve Markets

Abstract

This work presents a novel hourly ahead profit model for an active distribution company in a pool-based system. The presented model engages the distribution company in both energy-producing and reserve-providing activities. The distribution company's earnings from the reserve market include the remuneration for real-time generation and ready-for-service capacity. To achieve the optimal decisions for an active distribution company in the energy and reserve markets, a two-stage optimization model and associated mathematical formulations have been developed. The first sub-problem extracts a single operating profile (a lumped financial model) of the whole distribution system, including distributed generations and interruptible loads, at the connecting point to the upstream network. The second sub-problem determines the optimal values of decision variables (power and reserve commodities) to maximize the distribution company's profit, if such variables are accepted in the markets. In other words, it aims to optimally allocate the distribution company's generating capability for proposing into the energy and reserve markets. Several scenarios on the reserve market prices and on the summoning coefficients for real-time generation in reserve markets are considered. According to the simulation results, further economical benefits may encourage the distribution company to take different roles in the market at different hours.