Demand Response Strategy of a Virtual Power Plant for Internal Electricity Market

Operational challenges are expected when a large amount of wind and solar energy is added to the electricity system. It is necessary to introduce new technologies to allow more energy portfolio integration into power systems in order to compensate for the intermittent nature of renewable energy sources (RESs) such as wind and solar power due to their fluctuating nature. A possible solution to the problem of renewable energy integration in power market transactions is the idea of a virtual power plant (VPP). A VPP is a novel and smart approach of integrating distributed energy resources (DERs) such as demand response (DR) and energy storage system (ESS). A VPP could exploit DERs and demand-side participation to mitigate peak loads and thus sustain grid stability. This paper presents a DR strategy of a VPP for simulating energy transactions within the VPP internal electricity market. The method assesses the impact of the DR program on renewable energies integration aiming to minimize VPP operating costs over the short-term planning horizon. Stochastic programming theory is used to address the optimization problem while protecting the interests of the end users. Preliminary findings show that peak load has been reduced while the overall cost of operating has decreased.