PNNL

Abstract

We are motivated by the problem faced by the aggregator (market coordinator) to optimally schedule the day-ahead operation of flexible loads and energy storages through transactive coordination. The aggregator, which may be the ISO/DSO/LSE/Utility company/Microgrid controller depending on the system considered, aims to maximize social welfare of interconnected distributed energy resources (DERs) by determining the optimal hourly prices for the next operating day. Arbitrage and private objectives are incorporated to ensure participation of third-party energy storages. We show that the coordination problem can be mathematically formulated as a multi-period optimal control problem with global power flow constraints and local DER-level constraints, and propose an iterative hierarchical decentralized solution method which respects the privacy of DERs. Under proper convexity assumptions, the algorithm will converge to the optimal day-ahead market clearing prices. We illustrate the algorithm using a four-bus power system with DC power flow constraints. Results show that incorporating degradation cost decreases the energy storage's ability of peak shaving and that social welfare of the system increases when discharging and charging efficiencies increase.