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Coordinating the operation of units at the interface between heat andelectricity systems, such as combined heat and power plants and heat pumps, isessential to reduce inefficiencies in each system and help achieve acost-effective and efficient operation of the overall energy system. Theseenergy systems are currently operated by sequential markets, which interfacethe technical and economic aspects of the systems. In that context, this studyintroduces an electricity-aware heat unit commitment model, which seeks tooptimize the operation of the heat system while accounting for thetechno-economic interdependencies between heat and electricity markets. Theseinterdependencies are represented by bid-validity constraints, which model thelinkage between the heat and electricity outputs and costs of combined heat andpower plants and heat pumps. This approach also constitutes a novel marketmechanism for the coordination of heat and electricity systems, which definesheat bids conditionally on electricity prices. Additionally, a tractablereformulation of the resulting trilevel optimization problem as a mixed integerlinear program is proposed. Finally, it is shown on a case study that theproposed model yields a 23% reduction in total operating cost and a 6%reduction in wind curtailment compared to a traditional decoupled unitcommitment model.

A Bid-Validity Mechanism for Sequential Heat and Electricity Market Clearing