Stochastic Optimal Bidding Strategy for Energy and Ancillary Services in Microgrid

Abstract

With the transformation of electricity markets from vertical integration to horizontally distributed systems and because of the significant penetration of renewables into the grid, participation of renewables in the electricity trading process has become mandatory. Due to the uncertainties in the energy dispatched by renewables, central aggregators have been penalizing the nonconventional energy for the imbalances in the submitted bids. These penalties discourage the renewables from engaging as market participants. This article has proposed a two-stage stochastic joint bidding strategy for wind power plant (WPP) and pumped storage plant (PSP) in the microgrid to overcome these limitations. In the first stage, collective energy and ancillary service bids are optimized based on the day ahead energy and ancillary service prices. In the second stage, different wind power scenarios are realized based on historical patterns, and PSP reduces the deviations in the submitted joint bids in the energy and ancillary service markets. The proposed stochastic bidding strategy is demonstrated by a WPP of capacity 3 MW, and six PSP units of each capacity 1 MW. This stochastic bidding strategy hedges the risk introduced by renewables. Moreover, this bidding strategy compares the two ancillary services, spinning reserve (SR) and fast response reserve (FRR), regarding expected revenue and penalty for the imbalances in the submitted joint energy bids.