Dynamic capacity withholding assessment of virtual power plants in local energy and reserve market

Abstract

The increasing utilization of distributed generation resources led to the formation of active distribution networks and virtual power plants (VPPs), which have changed the paradigms of electrical energy transactions in local energy markets. The VPPs can form capacity-withholding groups and impose market power to gain more profits, which may increase the costs of energy procurements for consumers. This paper presents an algorithm for the local electricity market operator in distribution networks to assess the dynamic capacity withholding of VPPs in the local energy and reserve markets. The main contribution of this paper is proposing indices to evaluate the dynamic capacity withholding of VPPs in energy and reserve markets. The other contribution of this paper is that it also quantitatively analyzes the impact of withholding processes on the flexibility of the distribution network. An optimization process is used to estimate coordinated offers of VPPs in the energy market in order to prevent the formation of withholding groups. The proposed algorithm was assessed for the 123-bus IEEE test system and the energy and reserve dynamic capacity-withholding indices were determined for different operating conditions.