Open AccessInvestigating the impact of distributed energy resources on market power of strategic utility corporation
Author(s) -
Chen Zhi
Publication year - 2019
Publication title -
iet energy systems integration
Language(s) - English
Resource type - Journals
ISSN - 2516-8401
DOI - 10.1049/iet-esi.2018.0029
Subject(s) - market clearing , portfolio , corporation , profit (economics) , market power , distributed generation , energy market , imperfect , grid , microeconomics , industrial organization , economics , computer science , operations research , business , renewable energy , financial economics , finance , engineering , linguistics , philosophy , geometry , mathematics , electrical engineering , monopoly
Market participants may employ potential market power improperly in energy trading. On the other hand, integrations of distributed energy resources (DER) are highly complex since it entails the optimal coordination of a diverse portfolio of DER under multiple sources of uncertainty. A large number of possible stochastic realisations that arise can lead to complex operational models that become problematic in real‐time market environments. Although recent works have explored the impacts of DER on numerous aspects of grid operation and planning, its role in imperfect competitive energy markets has not been investigated nonetheless. This article proposes the theoretical and quantitative analysis of the withholding strategies for the utility corporations with the integration of DERs for the first time and the corresponding market power effects on utility corporation's profits and market prices. The quantitative demonstration is supported by a bi‐level model with the optimal company profit for the upper level and the market clearing for the lower level. This bi‐level problem can be solved directly when a single‐level problem is obtained with a mathematical program with equilibrium constraints (MPEC). Numerical studies are implemented on a wholesale market with the day‐ahead horizon and hourly resolution.