Market Participation of Energy Storage Systems for Frequency Regulation Service: A Bi-level Model

This paper examines the prospect of using the energy storage systems (ESSs) in the distribution network for frequency regulation service under the two-settlement market mechanism. A bi-level problem is formulated to determine the bidding strategy for the ESS which provides regulation service for the system operator in the day-ahead and real-time markets, where the upper-level problem maximizes the ESS’ revenue from frequency regulation and the lower-level problem models the system operator’s market clearing. The problem is rendered applicable for the ESSs in the distribution network by addressing the power flow constraints. The uncertainty associated with other competitive ESSs and the system frequency deviations are incorporated by using scenarios for possible realizations. The formulated problem is transformed to a mixed-integer linear program by replacing the lower-level problem with the Karush-Kuhn-Tucker (KKT) optimality conditions and tackling the nonconvexity in the objective function based on strong duality. Case studies are carried out on an IEEE 37-bus test feeder by using market data from California Independent System Operator (CAISO). The results demonstrate that the ESS can increase its revenue from frequency regulation by using our proposed method to determine the bidding strategy.