Stochastic Risk-driven Bidding of a Solar and Storage Aggregator in Primary Frequency and Energy Markets: A Performance-based Capacity Allocation Approach

Abstract

The ever-increasing impact of deploying renewable energy resources reducing power system inertia, requires distributed energy resource (DER) aggregators to secure high-performance, fast-responding primary frequency reserve (PFR) in ancillary service markets. However, enabling immediate and local regulation of the operating point upon detecting frequency deviations imposes the necessity of allocating specific headroom for DERs. The individual headroom susceptibility to uncertainty and response speed of a certain DER not only compromises aggregated headroom performance in the PFR market but also leads to incurring unnecessary opportunity costs in the energy market and inadequate frequency control in the power system. To address this challenge, this paper introduces an integrated probabilistic performance index for DERs that considers their individual interactive heterogeneous response speed and uncertainty. Using this index, aggregators overseeing photovoltaic and smart buildings equipped with energy storage can evaluate, allocate, and remunerate optimal headroom capacity for individual DERs based on their performance. This approach ensures maximum aggregated profits and minimum opportunity costs in the PFR and energy markets while improving the performance of the provided PFR capacity, respectively. These tasks are aimed by a novel optimal capacity allocation strategy for an aggregator in both markets. This strategy employs a mixed-integer linear programming model to find the optimal solution and the conditional value-at-risk measure to tackle the uncertainties faced with the problem. The efficiency of the proposed model is assessed within a system reflecting the ERCOT market structure, demonstrating improved aggregated headroom performance, reduced energy opportunity costs, diminished risk of capacity shortage, and improved load frequency control (LFC) from the power system perspective.