IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v350y2023ics0306261923010966.html
   My bibliography  Save this article

Participation of strategic district heating networks in electricity markets: An arbitrage mechanism and its equilibrium analysis

Author

Listed:
  • Zheng, Weiye
  • Xu, Siyu
  • Liu, Jiawei
  • Zhu, Jizhong
  • Luo, Qingju

Abstract

Combined electricity-heat operation improves social welfare compared with the traditional heat-driven operation. However, it is left open how to achieve such an improvement in the current electricity market. Therefore, an arbitrage mechanism enabling strategic district heating networks (DHNs) to participate in electricity markets is designed, which settles the payment concerning the power deviation and the locational marginal price (LMP). Individual interests of both energy sectors are addressed via a bi-level model, while analytical results of the arbitrage equilibrium are proved theoretically. Although the mechanism intends to allow DHNs to profit selfishly from utilizing energy storage, it is strikingly guaranteed that electric power networks also benefit from this. A Pareto improvement is thus achieved by the mechanism with enhanced social welfare efficiency at the arbitrage equilibrium. The proposed mechanism is numerically compared with the traditional heat-driven operation, combined operation and existing cooperative and non-cooperative game approaches, while the merits are verified in two integrated electricity and heat systems with different scales.

Suggested Citation

  • Zheng, Weiye & Xu, Siyu & Liu, Jiawei & Zhu, Jizhong & Luo, Qingju, 2023. "Participation of strategic district heating networks in electricity markets: An arbitrage mechanism and its equilibrium analysis," Applied Energy, Elsevier, vol. 350(C).
    • Handle: RePEc:eee:appene:v:350:y:2023:i:c:s0306261923010966
    DOI: 10.1016/j.apenergy.2023.121732
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261923010966
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2023.121732?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Voswinkel, Simon & Höckner, Jonas & Khalid, Abuzar & Weber, Christoph, 2022. "Sharing congestion management costs among system operators using the Shapley value," Applied Energy, Elsevier, vol. 317(C).
    2. Zheng, Weiye & Lu, Hao & Zhu, Jizhong, 2023. "Incentivizing cooperative electricity-heat operation: A distributed asymmetric Nash bargaining mechanism," Energy, Elsevier, vol. 280(C).
    3. Li, Jinghua & Fang, Jiakun & Zeng, Qing & Chen, Zhe, 2016. "Optimal operation of the integrated electrical and heating systems to accommodate the intermittent renewable sources," Applied Energy, Elsevier, vol. 167(C), pages 244-254.
    4. Wang, Can & Yan, Chao & Li, Gengfeng & Liu, Shiyu & Bie, Zhaohong, 2020. "Risk assessment of integrated electricity and heat system with independent energy operators based on Stackelberg game," Energy, Elsevier, vol. 198(C).
    5. Gu, Wei & Wang, Jun & Lu, Shuai & Luo, Zhao & Wu, Chenyu, 2017. "Optimal operation for integrated energy system considering thermal inertia of district heating network and buildings," Applied Energy, Elsevier, vol. 199(C), pages 234-246.
    6. Huang, Yujing & Wang, Yudong & Liu, Nian, 2022. "A two-stage energy management for heat-electricity integrated energy system considering dynamic pricing of Stackelberg game and operation strategy optimization," Energy, Elsevier, vol. 244(PA).
    7. Wang, Yongli & Liu, Zhen & Cai, Chengcong & Xue, Lu & Ma, Yang & Shen, Hekun & Chen, Xin & Liu, Lin, 2022. "Research on the optimization method of integrated energy system operation with multi-subject game," Energy, Elsevier, vol. 245(C).
    8. Zhang, Menglin & Wu, Qiuwei & Wen, Jinyu & Pan, Bo & Qi, Shiqiang, 2020. "Two-stage stochastic optimal operation of integrated electricity and heat system considering reserve of flexible devices and spatial-temporal correlation of wind power," Applied Energy, Elsevier, vol. 275(C).
    9. Yao, Yunting & Gao, Ciwei & Lai, Kexing & Chen, Tao & Yang, Jianlin, 2021. "An incentive-compatible distributed integrated energy market mechanism design with adaptive robust approach," Applied Energy, Elsevier, vol. 282(PA).
    10. Wang, Yubin & Zheng, Yanchong & Yang, Qiang, 2023. "Nash bargaining based collaborative energy management for regional integrated energy systems in uncertain electricity markets," Energy, Elsevier, vol. 269(C).
    11. Zhao, Leilei & Xue, Yixun & Sun, Hongbin & Du, Yuan & Chang, Xinyue & Su, Jia & Li, Zening, 2023. "Benefit allocation for combined heat and power dispatch considering mutual trust," Applied Energy, Elsevier, vol. 345(C).
    12. Wang, Lu & Gu, Wei & Wu, Zhi & Qiu, Haifeng & Pan, Guangsheng, 2020. "Non-cooperative game-based multilateral contract transactions in power-heating integrated systems," Applied Energy, Elsevier, vol. 268(C).
    13. Zheng, Weiye & Hill, David J., 2021. "Incentive-based coordination mechanism for distributed operation of integrated electricity and heat systems," Applied Energy, Elsevier, vol. 285(C).
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Zheng, Weiye & Lu, Hao & Zhu, Jizhong, 2023. "Incentivizing cooperative electricity-heat operation: A distributed asymmetric Nash bargaining mechanism," Energy, Elsevier, vol. 280(C).
    2. Han, Fengwu & Zeng, Jianfeng & Lin, Junjie & Zhao, Yunlong & Gao, Chong, 2023. "A stochastic hierarchical optimization and revenue allocation approach for multi-regional integrated energy systems based on cooperative games," Applied Energy, Elsevier, vol. 350(C).
    3. Zhang, Menglin & Wu, Qiuwei & Wen, Jinyu & Lin, Zhongwei & Fang, Fang & Chen, Qun, 2021. "Optimal operation of integrated electricity and heat system: A review of modeling and solution methods," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    4. Chen, Xi & Wang, Chengfu & Wu, Qiuwei & Dong, Xiaoming & Yang, Ming & He, Suoying & Liang, Jun, 2020. "Optimal operation of integrated energy system considering dynamic heat-gas characteristics and uncertain wind power," Energy, Elsevier, vol. 198(C).
    5. Zeynali, Saeed & Nasiri, Nima & Ravadanegh, Sajad Najafi & Marzband, Mousa, 2022. "A three-level framework for strategic participation of aggregated electric vehicle-owning households in local electricity and thermal energy markets," Applied Energy, Elsevier, vol. 324(C).
    6. Chen, Yuwei & Guo, Qinglai & Sun, Hongbin & Li, Zhengshuo & Pan, Zhaoguang & Wu, Wenchuan, 2019. "A water mass method and its application to integrated heat and electricity dispatch considering thermal inertias," Energy, Elsevier, vol. 181(C), pages 840-852.
    7. Mu, Yunfei & Wang, Congshan & Cao, Yan & Jia, Hongjie & Zhang, Qingzhu & Yu, Xiaodan, 2022. "A CVaR-based risk assessment method for park-level integrated energy system considering the uncertainties and correlation of energy prices," Energy, Elsevier, vol. 247(C).
    8. Wang, Dan & Zhi, Yun-qiang & Jia, Hong-jie & Hou, Kai & Zhang, Shen-xi & Du, Wei & Wang, Xu-dong & Fan, Meng-hua, 2019. "Optimal scheduling strategy of district integrated heat and power system with wind power and multiple energy stations considering thermal inertia of buildings under different heating regulation modes," Applied Energy, Elsevier, vol. 240(C), pages 341-358.
    9. Gao, Chong & Lin, Junjie & Zeng, Jianfeng & Han, Fengwu, 2022. "Wind-photovoltaic co-generation prediction and energy scheduling of low-carbon complex regional integrated energy system with hydrogen industry chain based on copula-MILP," Applied Energy, Elsevier, vol. 328(C).
    10. Kouhia, Mikko & Laukkanen, Timo & Holmberg, Henrik & Ahtila, Pekka, 2019. "District heat network as a short-term energy storage," Energy, Elsevier, vol. 177(C), pages 293-303.
    11. Wang, Hao-ran & Feng, Tian-tian & Xiong, Wei, 2022. "How can the dynamic game be integrated into blockchain-based distributed energy resources multi-agent transactions for decision-making?," Energy, Elsevier, vol. 254(PB).
    12. Shen, Lu & Dou, Xiaobo & Long, Huan & Li, Chen & Chen, Kang & Zhou, Ji, 2021. "A collaborative voltage optimization utilizing flexibility of community heating systems for high PV penetration," Energy, Elsevier, vol. 232(C).
    13. Zhang, Menglin & Wu, Qiuwei & Wen, Jinyu & Zhou, Bo & Guan, Qinyue & Tan, Jin & Lin, Zhongwei & Fang, Fang, 2022. "Day-ahead stochastic scheduling of integrated electricity and heat system considering reserve provision by large-scale heat pumps," Applied Energy, Elsevier, vol. 307(C).
    14. Li, Xue & Li, Wenming & Zhang, Rufeng & Jiang, Tao & Chen, Houhe & Li, Guoqing, 2020. "Collaborative scheduling and flexibility assessment of integrated electricity and district heating systems utilizing thermal inertia of district heating network and aggregated buildings," Applied Energy, Elsevier, vol. 258(C).
    15. Zhao, Leilei & Xue, Yixun & Sun, Hongbin & Du, Yuan & Chang, Xinyue & Su, Jia & Li, Zening, 2023. "Benefit allocation for combined heat and power dispatch considering mutual trust," Applied Energy, Elsevier, vol. 345(C).
    16. Liu, Peiyun & Ding, Tao & Zou, Zhixiang & Yang, Yongheng, 2019. "Integrated demand response for a load serving entity in multi-energy market considering network constraints," Applied Energy, Elsevier, vol. 250(C), pages 512-529.
    17. Tzu-Chia Chen & José Ricardo Nuñez Alvarez & Ngakan Ketut Acwin Dwijendra & Zainab Jawad Kadhim & Reza Alayi & Ravinder Kumar & Seepana PraveenKumar & Vladimir Ivanovich Velkin, 2023. "Modeling and Optimization of Combined Heating, Power, and Gas Production System Based on Renewable Energies," Sustainability, MDPI, vol. 15(10), pages 1-16, May.
    18. Jiang, Tuo & Min, Yong & Zhou, Guiping & Chen, Lei & Chen, Qun & Xu, Fei & Luo, Huanhuan, 2021. "Hierarchical dispatch method for integrated heat and power systems considering the heat transfer process," Renewable and Sustainable Energy Reviews, Elsevier, vol. 135(C).
    19. Huang, Yujing & Wang, Yudong & Liu, Nian, 2022. "A two-stage energy management for heat-electricity integrated energy system considering dynamic pricing of Stackelberg game and operation strategy optimization," Energy, Elsevier, vol. 244(PA).
    20. Qiu, Haifeng & Vinod, Ashwin & Lu, Shuai & Gooi, Hoay Beng & Pan, Guangsheng & Zhang, Suhan & Veerasamy, Veerapandiyan, 2023. "Decentralized mixed-integer optimization for robust integrated electricity and heat scheduling," Applied Energy, Elsevier, vol. 350(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:350:y:2023:i:c:s0306261923010966. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.