Market-based optimization of integrated energy systems: Modeling and analysis of multi-carrier energy networks

The integration of cogeneration plants and energy conversion facilities has ushered in a new era for energy systems, presenting opportunities and challenges in efficient operation and management. In this evolving landscape, there is a growing need for mathematical models and analytical methods to understand the complex dynamics between energy flows and strategic behaviors in multi-carrier energy systems. This article explores an integrated thermal and electrical energy distribution system from a market perspective, aiming to deepen understanding of these complex networks. The study resolves the electricity market by accounting for network losses using a nonlinear optimal alternating current (AC) electric load distribution model. Given the computational complexities, a polyhedral outer approximation of the second-order cone and convex relaxation techniques are employed to derive a linear market settlement model. Additionally, an optimal heat load distribution model is developed, pricing the heat market based on regional marginal costs. The market equilibrium, viewed as the intersection of optimal electrical and thermal load distribution, is reformulated as a mixed-integer linear programming (MILP) model. Case studies demonstrate the model's ability to capture the complexity of integrated systems and its practical application in real-world scenarios, revealing the impact of elastic loads and strategic supplier behavior on market dynamics. The analysis suggests that adopting this innovative approach can potentially result in a 50 % improvement in energy utilization and a 35 % reduction in peak demand.