Wholesale Market Participation via Competitive DER Aggregation

Abstract

In this article, we consider the aggregation of distributed energy resources (DERs), such as solar PV, energy storage, and flexible loads, by a profit-seeking aggregator participating directly in the wholesale market under distribution network access constraints. We propose a competitive DER aggregator (DERA) model that directly controls local DERs to maximize its profits, while ensuring each aggregated customer gains a surplus higher than their surplus under the regulated retail tariff. The DERA participates in the wholesale electricity market as virtual storage with optimized generation offers and consumption bids derived from the proposed competitive aggregation model. Also derived are DERA’s bid curves for the distribution network access and DERA’s profitability when competing with the regulated retail tariff. We show that, with the same distribution network access, the proposed DERA’s wholesale market participation achieves the same welfare-maximizing outcome as when its customers participate directly in the wholesale market. Extensive numerical studies compare the proposed DERA with existing methods in terms of customer surplus and DERA profit. We empirically evaluate how many DERAs can survive in the competition at the long-run equilibrium and assess the impacts of DER adoption levels and distribution network access on short-run operations.