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This paper proposes a Stackelberg game approach to minimize both the wind power imbalances and carbon emissions by harnessing demand response (DR) of residential heating loads fed by electricity or district heating (DH) options. The problem is formulated as a bilevel optimization model. An aggregator (leader) at the upper level aims at minimizing the mismatch between electricity demand and wind power while mitigating the carbon emissions arising from the DH system. The aggregator owns a wind farm and is responsible for controlling the DH generation through a combustion-based source and a deep well heat pump system (DWHP), which converts power into heat by utilizing wind power and replacing combustion-based DH. The aggregator submits bonuses to the households (followers) at the lower level incentivizing them to modify their consumption profile. The households receive the bonus offers and consequently decide how to optimize their net electricity and DH energy payments via an upward or downward DR strategy. The uncertainties associated with wind power and heating loads are considered using a stochastic programming framework. Long term thermal performance of the DWHP is studied separately. Results prove that the proposed bilevel framework enables significant reductions in wind power imbalances, carbon emissions, and energy payments.

Minimizing Wind Power Curtailment and Carbon Emissions by Power to Heat Sector Coupling—A Stackelberg Game Approach