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Uncertainty-Informed Renewable Energy Scheduling: A Scalable Bilevel Framework

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  • Dongwei Zhao
  • Vladimir Dvorkin
  • Stefanos Delikaraoglou
  • Alberto J. Lamadrid L.
  • Audun Botterud

Abstract

This work proposes an uncertainty-informed bid adjustment framework for integrating variable renewable energy sources (VRES) into electricity markets. This framework adopts a bilevel model to compute the optimal VRES day-ahead bids. It aims to minimize the expected system cost across day-ahead and real-time stages and approximate the cost efficiency of the stochastic market design. However, solving the bilevel optimization problem is computationally challenging for large-scale systems. To overcome this challenge, we introduce a novel technique based on strong duality and McCormick envelopes, which relaxes the problem to a linear program, enabling large-scale applications. The proposed bilevel framework is applied to the 1576-bus NYISO system and benchmarked against a myopic strategy, where the VRES bid is the mean value of the probabilistic power forecast. Results demonstrate that, under high VRES penetration levels (e.g., 40%), our framework can significantly reduce system costs and market-price volatility, by optimizing VRES quantities efficiently in the day-ahead market. Furthermore, we find that when transmission capacity increases, the proposed bilevel model will still reduce the system cost, whereas the myopic strategy may incur a much higher cost due to over-scheduling of VRES in the day-ahead market and the lack of flexible conventional generators in real time.

Suggested Citation

  • Dongwei Zhao & Vladimir Dvorkin & Stefanos Delikaraoglou & Alberto J. Lamadrid L. & Audun Botterud, 2023. "Uncertainty-Informed Renewable Energy Scheduling: A Scalable Bilevel Framework," Papers 2312.03868, arXiv.org.
    • Handle: RePEc:arx:papers:2312.03868
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    References listed on IDEAS

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    1. Victor M. Zavala & Kibaek Kim & Mihai Anitescu & John Birge, 2017. "A Stochastic Electricity Market Clearing Formulation with Consistent Pricing Properties," Operations Research, INFORMS, vol. 65(3), pages 557-576, June.
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