Integrating Energy Management of Autonomous Smart Grids in Electricity Market Operation

This study presents a market operation model integrated with energy management programs of independent smart grids using bilevel optimization. In this framework, autonomous smart grid entities, in the lower levels, operate their own networks and send decisions to the upper level market operator that clears the day ahead market based on unit commitment and second order conic AC power flow models. A single-leader multi-follower game is thus developed, in which every smart grid derives optimal schedules of its own renewable energy resources, storage devices, and responsive demands that are interconnected through a distribution grid using mixed integer linear programming. Given the mixed integer nature of the upper and lower level decisions, we develop and customize an exact reformulation-decomposition method to compute this bilevel optimization program. Through numerical experiments performed on three test systems, we demonstrate that the proposed modeling paradigm can accurately represent the physics of the transmission and distribution grids and achieves reasonable results with significant computational efficacy.