Wholesale Market Participation of DERA: Competitive DER Aggregation
We consider the aggregation of distributed energy resources (DERs) by a profit-seeking DER aggregator (DERA), participating directly in the wholesale electricity market. We propose a competitive DER aggregation that maximizes the DERA's profit subject to that each customer of the DERA gains no less surplus and pays no higher energy cost than that 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 DERA's competitive aggregation. Also derived are DERA's bid curves for the distribution network access. We show that, with sufficiently high network access, the proposed DERA's wholesale market participation achieves the same welfare-maximizing outcome as when its customers participate directly in the wholesale electricity market. Numerical studies compare the proposed competitive DER aggregation with existing benchmarks on surpluses of DERA's customers, DERA profits, and the overall social welfare as functions of the DER adoption level in the distribution system.
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