Optimal bidding strategy for virtual power plant participating in joint energy and reserve market considering physical-economic feasible operation region

Distributed energy resources (DERs), with the integration of virtual power plants (VPPs), can provide substantial power and reserve capacity support to the system. In order to fully utilize their aggregated flexibility, this paper proposes a two-stage optimization framework for VPPs to participate in the joint energy and reserve market. In the first stage, an aggregation model for the physical-economic feasible operation region (FOR) is proposed, encapsulating the operational characteristics of the VPP. The model quantifies the active-reactive power FOR of the VPP and proposes a method to approximate the cost curve of the aggregated power by mapping any point in the PQ chart to a cost via analytical functions. In the second stage, a bi-level optimization model for the VPP to participate in the joint market is established. The upper level embeds the aggregation model of the first stage and establishes an optimal bidding model for VPP with the objective of minimizing the total cost. In the lower level, a clearing model for the joint market is developed to satisfy the system demand for power and reserve capacity. Case studies are adopted to validate the feasibility of the proposed method in estimating the physical-economic feasible operation region of VPP and to enhance the effectiveness of the bidding strategy for VPP and balance the social welfare and the interests of market players simultaneously.