Hierarchical energy and frequency security pricing in a smart microgrid: An equilibrium-inspired epsilon constraint based multi-objective decision making approach

Abstract The present paper formulates a frequency security constrained energy management system for an islanded microgrid. Static and dynamic securities of the microgrids have been modeled in depth based on droop control paradigm. The derived frequency dependent modeling is incorporated into a multi-objective energy management system. Microgrid central controller is in charge to determine optimal prices of energy and frequency security such that technical, economic and environmental targets are satisfied simultaneously. The associated prices are extracted based on calculating related Lagrange multipliers corresponding to providing the microgrid hourly energy and reserve requirements. Besides, to generate optimal Pareto solutions of the proposed multi-objective framework augmented epsilon constraint method is applied. Moreover, a novel methodology on the basis of Nash equilibrium strategy is devised and employed to select the best compromise solution from the generated Pareto front. Comprehensive analysis tool is implemented in a typical test microgrid and executed over a 24 h scheduling time horizon. The energy, primary and secondary frequency control reserves have been scheduled appropriately in three different case-studies which are defined based on the microgrid various operational policies. The optimization results verify that the operational policies adopted by means of the microgrid central controller have direct impacts on determined energy and security prices. The illustrative implementations can give the microgrid central controller an insight view to provide an appropriate trade-off between the microgrid security requirements and economic-environmental objectives.