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Optimal procurement of flexibility services within electricity distribution networks

Author

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  • Laur, Arnaud
  • Nieto-Martin, Jesus
  • Bunn, Derek W.
  • Vicente-Pastor, Alejandro

Abstract

The increased injection of volatile renewable energy at local levels into the electricity grid is forcing the distribution network operators to seek participation in emerging service markets in order to obtain the flexibility required to balance their systems. However, the distribution companies lack experience in designing new market arrangements. We consider a market framework wherein a proactive distribution company is willing to purchase reserve capacity for overload management, using a two-part tariff. The problem is modelled as a three-stage stochastic market including Day-Ahead, Intra-Day and Real-Time, with uncertainty on both demand and generation. After assessing our formulation, we discuss the impact of risk-aversion at each stage with an objective function based on CVaR. Finally, different Intra-Day clearing horizons and delivery settings are evaluated. The results show that risk-aversion close to Real-Time becomes the main driver for decision makers and that early hedging strategies lead to sub-optimal solutions.

Suggested Citation

  • Laur, Arnaud & Nieto-Martin, Jesus & Bunn, Derek W. & Vicente-Pastor, Alejandro, 2020. "Optimal procurement of flexibility services within electricity distribution networks," European Journal of Operational Research, Elsevier, vol. 285(1), pages 34-47.
    • Handle: RePEc:eee:ejores:v:285:y:2020:i:1:p:34-47
    DOI: 10.1016/j.ejor.2018.11.031
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    3. Nolden, Colin & Banks, Nicholas & Irwin, Jack & Wallom, David & Parrish, Bryony, 2025. "The economics of flexibility service contracting in local energy markets: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 215(C).
    4. Skolfield, J. Kyle & Escobedo, Adolfo R., 2022. "Operations research in optimal power flow: A guide to recent and emerging methodologies and applications," European Journal of Operational Research, Elsevier, vol. 300(2), pages 387-404.
    5. Varawala, Lamia & Dán, György & Hesamzadeh, Mohammad Reza & Baldick, Ross, 2023. "A generalised approach for efficient computation of look ahead security constrained optimal power flow," European Journal of Operational Research, Elsevier, vol. 310(2), pages 477-494.
    6. Russo, Marianna & Kraft, Emil & Bertsch, Valentin & Keles, Dogan, 2022. "Short-term risk management of electricity retailers under rising shares of decentralized solar generation," Energy Economics, Elsevier, vol. 109(C).
    7. Juan Sebastian Roncancio & José Vuelvas & Diego Patino & Carlos Adrián Correa-Flórez, 2022. "Flower Greenhouse Energy Management to Offer Local Flexibility Markets," Energies, MDPI, vol. 15(13), pages 1-20, June.

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