Decentralized Operation of Interdependent Power Distribution Network and District Heating Network: A Market-Driven Approach

Combined harnessing of electrical and thermal energies could leverage their complementary nature, inspiring the integration of power grids and centralized heating systems in future smart cities. This paper considers interconnected power distribution network (PDN) and district heating network (DHN) infrastructures through combined heat and power units and heat pumps. In the envisioned market framework, the DHN operator solves an optimal thermal flow problem given the nodal electricity prices and determines the best heat production strategy. Variate coefficients of performance of heat pumps with respect to different load levels are considered and modeled in a disciplined convex optimization format. A two-step hydraulic-thermal decomposition method is suggested to approximately solve the optimal thermal flow problem via a second-order cone program. Simultaneously, the PDN operator clears the distribution power market via an optimal power flow problem given the demands from the DHN. Electricity prices are revealed by dual variables at the optimal solution. The whole problem gives rise to a Nash-type game between the two systems. A best-response decentralized algorithm is proposed to identify the optimal operation schedule of the coupled infrastructure, which interprets a market equilibrium as neither system has an incentive to alter their strategies. Numeric results demonstrate the potential benefits of the proposed framework in terms of reducing wind curtailment and system operation cost.