Optimal Bidding Strategy for a Distributed Energy Resource Aggregator in Energy and Reserve Markets Considering Security Check.

With their increasing penetration in power systems, distributed energy resources (DERs) have great potential to enhance their profits by participating in the electricity market via aggregation. Because most DERs are integrated into distribution systems, the strategic bidding behavior of a DER aggregator will have a significant impact on the operation of the distribution system. In this paper, a single-leader-multi-follower bi-level optimization model is proposed to investigate the strategic bidding behavior of the price-maker DER aggregator in day-ahead joint energy and reserve markets. The mixed-integer optimization problems for the security check of the distribution system are introduced as lower-level problems for the security check of the DERs' scheduling scheme under three different scenarios. The proposed complex bi-level problem is then transformed into a bi-level mixed-integer linear programming model and solved. First, a novel linearized power flow model for the distribution system considering the substation transformer tap is developed to simplify the security check problem. Then, the proposed bi-level model is globally solved using a proposed tailored optimization algorithm that integrates the traditional Karush-Kuhn-Tucker-based reformulation approach and a relaxation-based bi-level reformulation and decomposition algorithm. Finally, case studies are carried out on a constructed integrated transmission and distribution (T&D) system and a practical integrated T&D system. The simulation results indicate that the available services and the corresponding profits will decrease with the security limitation of the distribution system.