Optimal scheduling of resources for a price-maker distribution company in electricity markets considering network component failures

Abstract

Electricity generation and storage resources, demand-side participation, along with modern communication infrastructure, have led distribution companies (DisCos) to increasingly play a strategic role in wholesale electricity markets. Although these resources have increased the security of power supply in modern distribution networks, this is still affected by random failures of distribution and sub-transmission network components. Therefore, the main issue that needs to be addressed is how the random failure of the components of the network has an impact on the performance of the strategic DisCos. In this paper, a new framework is proposed to assist a strategic DisCo to determine the strategy of purchasing electricity from the wholesale market and selling electricity to end-users, considering the failure of network components. The proposed model is designed as a stochastic bi-level optimization problem that, at the upper-level, aims at maximizing the expected profit of the DisCo, optimal decisions on the use of resources, and prices offered to the wholesale and retail markets are adopted. Distributed generation (DG) units, battery-based storage sysetm, demand response (DR) programs, and load curtailment (LC) are the resources of the DisCo. Random failures of components are modeled by a set of scenarios. The expected energy not supplied (EENS) is used as the reliability index. The lower-level problem involves the wholesale market clearing problem, with the aim of maximizing the social welfare in which the power allocated to DisCo as well as locational marginal prices (LMPs) are calculated. The model is recast to the MPEC model and then linearized to a MILP model by KKT optimality conditions and dual theorem. Simulations show that, due to the constraints in the distribution network, the failure of distribution and sub-transmission lines reduces the strategic role of the DisCo in the wholesale market. The proposed model can used for analyzing the behavior of strategic DisCos in electricity markets under uncertainty.