Wholesale Market Participation of DERA: Competitive DER Aggregation (2307.02004v3)

Abstract: We consider the aggregation of distributed energy resources (DERs) by a profit-seeking DER aggregator (DERA), participating directly in the wholesale electricity market and constrained by the distribution network access. We propose a competitive DER aggregation that maximizes the DERA's profit subject to that each customer of the DERA gains no less surplus and pays no higher energy cost than that under the regulated retail tariff. The DERA participates in the wholesale electricity market as virtual storage with optimized generation offers and consumption bids derived from the DERA's competitive aggregation. Also derived are DERA's bid curves for the distribution network access and DERA's profitability when competing with the regulated retail tariff. We show that, with the same distribution network access, the proposed DERA's wholesale market participation achieves the same welfare-maximizing outcome as when its customers participate directly in the wholesale market. We empirically evaluate how many DERAs can survive in the long-run equilibrium. Numerical studies also compare the proposed DERA with existing benchmarks on surpluses of DERA's customers and DERA profits as functions of the DER adoption level and the distribution network access.