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Fair electricity transfer price and unit capacity selection for microgrids

Author

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  • Zhang, Di
  • Samsatli, Nouri J.
  • Hawkes, Adam D.
  • Brett, Dan J.L.
  • Shah, Nilay
  • Papageorgiou, Lazaros G.

Abstract

Microgrids are defined as an area of electricity distribution network that can operate autonomously from the rest of the network. In order to achieve the best economic outcomes, the participants in a microgrid can benefit from cooperation in microgrid design and operation. In this paper, a mathematical programming formulation is presented for fair, optimised cost distribution amongst participants in a general microgrid. The proposed formulation is based on the Game-theory Nash bargaining solution approach for finding optimal multi-partner cost levels subject to given upper bounds on the equivalent annual costs. The microgrid planning problem concerning the fair electricity transfer price and unit capacity selection is first formulated as a mixed integer non-linear programming model. Then, a separable programming approach is applied to reform the resulting mixed integer non-linear programming model to a mixed integer linear programming form. The model is applied to a case study with a microgrid involving five participants.

Suggested Citation

  • Zhang, Di & Samsatli, Nouri J. & Hawkes, Adam D. & Brett, Dan J.L. & Shah, Nilay & Papageorgiou, Lazaros G., 2013. "Fair electricity transfer price and unit capacity selection for microgrids," Energy Economics, Elsevier, vol. 36(C), pages 581-593.
    • Handle: RePEc:eee:eneeco:v:36:y:2013:i:c:p:581-593
    DOI: 10.1016/j.eneco.2012.11.005
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    2. Wu, Qiong & Ren, Hongbo & Gao, Weijun & Ren, Jianxing, 2017. "Benefit allocation for distributed energy network participants applying game theory based solutions," Energy, Elsevier, vol. 119(C), pages 384-391.
    3. Zhang, Di & Evangelisti, Sara & Lettieri, Paola & Papageorgiou, Lazaros G., 2015. "Optimal design of CHP-based microgrids: Multiobjective optimisation and life cycle assessment," Energy, Elsevier, vol. 85(C), pages 181-193.
    4. Cornélusse, Bertrand & Savelli, Iacopo & Paoletti, Simone & Giannitrapani, Antonio & Vicino, Antonio, 2019. "A community microgrid architecture with an internal local market," Applied Energy, Elsevier, vol. 242(C), pages 547-560.
    5. Menon, Ramanunni P. & Paolone, Mario & Maréchal, François, 2013. "Study of optimal design of polygeneration systems in optimal control strategies," Energy, Elsevier, vol. 55(C), pages 134-141.
    6. Ren, Hongbo & Wu, Qiong & Li, Qifen & Yang, Yongwen, 2020. "Optimal design and management of distributed energy network considering both efficiency and fairness," Energy, Elsevier, vol. 213(C).
    7. Acuña, Luceny Guzmán & Ríos, Diana Ramírez & Arboleda, Carlos Paternina & Ponzón, Esneyder González, 2018. "Cooperation model in the electricity energy market using bi-level optimization and Shapley value," Operations Research Perspectives, Elsevier, vol. 5(C), pages 161-168.
    8. Liu, Songsong & Papageorgiou, Lazaros G., 2018. "Fair profit distribution in multi-echelon supply chains via transfer prices," Omega, Elsevier, vol. 80(C), pages 77-94.
    9. Jing, Rui & Wang, Meng & Zhang, Zhihui & Wang, Xiaonan & Li, Ning & Shah, Nilay & Zhao, Yingru, 2019. "Distributed or centralized? Designing district-level urban energy systems by a hierarchical approach considering demand uncertainties," Applied Energy, Elsevier, vol. 252(C), pages 1-1.
    10. Jing, Rui & Xie, Mei Na & Wang, Feng Xiang & Chen, Long Xiang, 2020. "Fair P2P energy trading between residential and commercial multi-energy systems enabling integrated demand-side management," Applied Energy, Elsevier, vol. 262(C).
    11. Bertrand Corn'elusse & Iacopo Savelli & Simone Paoletti & Antonio Giannitrapani & Antonio Vicino, 2018. "A Community Microgrid Architecture with an Internal Local Market," Papers 1810.09803, arXiv.org, revised Feb 2019.
    12. Tomin, Nikita & Shakirov, Vladislav & Kozlov, Aleksander & Sidorov, Denis & Kurbatsky, Victor & Rehtanz, Christian & Lora, Electo E.S., 2022. "Design and optimal energy management of community microgrids with flexible renewable energy sources," Renewable Energy, Elsevier, vol. 183(C), pages 903-921.
    13. Ren, Fukang & Wei, Ziqing & Zhai, Xiaoqiang, 2022. "A review on the integration and optimization of distributed energy systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 162(C).
    14. Manur, Ashray & Venkataramanan, Giri & Sehloff, David, 2018. "Simple electric utility platform: A hardware/software solution for operating emergent microgrids," Applied Energy, Elsevier, vol. 210(C), pages 748-763.
    15. Zenginis, Ioannis & Vardakas, John S. & Echave, Cynthia & Morató, Moisés & Abadal, Jordi & Verikoukis, Christos V., 2017. "Cooperation in microgrids through power exchange: An optimal sizing and operation approach," Applied Energy, Elsevier, vol. 203(C), pages 972-981.
    16. Wu, Qiong & Ren, Hongbo & Gao, Weijun & Ren, Jianxing & Lao, Changshi, 2017. "Profit allocation analysis among the distributed energy network participants based on Game-theory," Energy, Elsevier, vol. 118(C), pages 783-794.

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    More about this item

    Keywords

    Microgrid; Electricity transfer pricing; Game theory; Mixed integer optimisation;
    All these keywords.

    JEL classification:

    • C61 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Optimization Techniques; Programming Models; Dynamic Analysis
    • C71 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Cooperative Games
    • Q41 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Demand and Supply; Prices
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • Q51 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics - - - Valuation of Environmental Effects
    • C54 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Quantitative Policy Modeling

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