Establishing a hierarchical local market structure using multi-cut Benders decomposition

• Published in: Applied energy Vol. 363; p. 123073
• Main Authors: Zhang, Haoyang, Zhan, Sen, Kok, Koen, Paterakis, Nikolaos G.
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.06.2024
• Subjects: AC OPF; Aggregator; Benders decomposition; Hierarchical framework; Local electricity market; Local flexibility market; Multi-cut; Peer-to-peer; Virtual power plant; Multi-cut; Hierarchical framework; Benders decomposition; Peer-to-peer; Aggregator; Local flexibility market; Virtual power plant; AC OPF; Local electricity market
• ISSN: 0306-2619; 1872-9118
• DOI: 10.1016/j.apenergy.2024.123073

Local electricity markets (LEMs) such as peer-to-peer (P2P) and community-based markets allow prosumers and consumers to exchange electricity products and services locally. In order to coordinate electricity trading and flexibility services, this paper proposes a hierarchical prosumer-centric market framework with a hybrid LEM and a local flexibility market (LFM). Multi-cut Benders decomposition (MCBD) is employed to decompose the integrated hybrid LEM into a centralized P2P market and multiple community-based markets. The aggregators coordinate energy sources and demands of households in low voltage (LV) distribution networks (DN) as virtual power plants (VPPs) and engage in trading through a P2P market over the medium voltage (MV) DN. In addition, a modified MCBD (M-MCBD) approach is proposed to accelerate the convergence process. The LFM is operated by the distribution system operator (DSO) and is formulated as a mixed-integer nonlinear programming (MINLP) problem which is further relaxed to a mixed-integer second-order cone programming (MI-SOCP) problem. The case study demonstrates that aggregators were able to collaborate on trading within the hybrid LEM to minimize the costs incurred by prosumers within the network. Furthermore, the proposed M-MCBD method improves the scalability of the MCBD by enhancing its convergence speed and accuracy, as demonstrated by testing on problems of varying scales. •A hierarchical market framework is designed comprising a hybrid LEM and an LFM.•The hybrid LEM combines a P2P market and community-based markets with VPPs.•The P2P market and community-based markets are coordinated by a modified MCBD.•The LFM is formulated as an MI-SOCP problem, with VPPs providing flexibility service.•VPPs bid block orders so that the operational characteristics of DERs are captured.