Heterogeneous aggregators competing in a local flexibility market for active distribution system management: A bi-level programming approach

Abstract The emerging role of aggregators in the electric power industry brings forth financial benefits and opportunities for the efficient management of active distribution systems (ADS). Aggregators represent heterogeneous sources of flexibility connected at demand-side, such as flexible loads, small-scale renewable energy sources (RES) and energy storage systems (ESS), and regulate their consumption and/or production in a manner to offer competitive flexibility services. This paper introduces a novel one-leader multi-followers bi-level programming model for the procurement of flexibility services in a local market that is organized for the management of ADS. The upper level problem maximizes the profit of a distribution company, which acts as supplier of electricity to end-customers, while considering the network technical constraints that are imposed by the distribution system operator. The lower level problems, in turn, maximize the profit of multiple heterogeneous aggregators acting as flexibility service providers. Two different types of aggregators have been modeled: a) load aggregators, each interacting with a group of flexible end-customers (residential or commercial), and b) RES-ESS aggregators, each managing a group of small-scale RES by exploiting ESS. The model is tested on a modified 33-nodes distribution system to demonstrate the financial benefits that arise, and fruitful findings are extracted with sensitivity analysis.