Nested Bilevel Energy Hub Bidding and Pricing With Price-Responsive Demand

Abstract

The increasing interdependence among different energy systems has led to the development of the integrated energy system (IES), where the energy hub (EH) is a primary market player in the distribution-level energy market. In an EH, subsystems such as electric, natural gas, and heating systems coexist and are interdependent. This paper proposes an innovative bilevel strategic decision-making framework of an EH that maximizes profit in the energy market and simultaneously reallocates profit among EH subsystems through a dynamic pricing mechanism. In the upper level, the EH acts as a price maker in the day-ahead distribution electricity market for profit maximization. In the lower level, Nash-Bargaining-based profit redistribution is realized through bilateral pricing between energy subsystems in the EH, where the fairness and interests of individual subsystems are respected. The price-responsive load couples the profit maximization and profit reallocation problems. Case studies demonstrate that the proposed framework can effectively solve the bidding and pricing problem of an EH in a day-ahead market, and the cooperation within energy subsystems contributes to higher overall profit and better fairness for the EH subsystems.