Optimal Management of Transactive Distribution Electricity Markets With Co-Optimized Bidirectional Energy and Ancillary Service Exchanges

This paper develops a novel co-optimized distribution system management algorithm for the distribution system operator to optimally manage the ever-increasing penetration of networked microgrids that are participating in the transactive distribution market as prosumers. For the first time, we evaluate how the incorporation of joint bidirectional energy and ancillary service exchanges could quantitatively increase the operation economy, flexibility, and reliability for both the microgrids and the distribution grid. We formulate the joint distribution system management problem using a bilevel programming approach, in which the upper level is a distribution system optimal management problem for the distribution system operator and the lower level is a microgrid optimal scheduling problem for each participating microgrid operator. Uncertainties from renewable energy generation and responsive loads within the distribution system are also incorporated in the problem formulation. The bilevel stochastic programming model is then reformulated as a single mixed-integer model to solve. The simulation-based case study supports that the proposed management scheme is capable of enhancing energy independency, system-wide efficiency, operational reliability, and economy of the distribution system in comparison with conventional transactive market management schemes.