On bilevel planning of advanced microgrids

Abstract This paper proposes a hierarchical decision making model for a coupled planning and operation problem of an advanced microgrid. The proposed model, is formulated as a bilevel optimization problem and recast as a mathematical program with equilibrium constraints (MPEC) where the decision variables of the two problems are independently controlled. The upper problem determines the strategic investment decision and optimal configuration of the microgrid, the needs for carbon emission permits and peak charges from using neighbouring network capacity, while the lower problem optimizes the output of the distributed energy resources (DER) through the implementation of an energy management system (EMS). The proposed approach was applied to the energy infrastructure of a remote mine. Results obtained through its application show significant savings in the cost of energy and improved benefits to stakeholders. They also show the advantages of a bilevel approach over other state-of-the-art microgrid planning methodologies.