Co-optimization of virtual power plants and distribution grids: Emphasizing flexible resource aggregation and battery capacity degradation

Coordination between virtual power plants and active distribution networks is crucial as these plants increasingly aggregate distributed resources within the power system. This study introduces a bilevel optimization framework to coordinate the scheduling of multiple virtual power plants and an active distribution network using pricing strategies for energy and reserves. The upper-level optimization minimizes total operating costs by incorporating bidding plans of the active distribution network in various markets, its interactions with multiple virtual power plants, and operational costs. The lower-level optimization maximizes revenue for each virtual power plant, considering both battery capacity degradation costs and operational costs of various resources. To facilitate solutions, this research developed a nonlinear transformation method for modeling capacity degradation. Based on the dispatching strategy from the virtual power plant, this study uses the squared difference between energy consumption of equipment for controllable loads and the strategy as the optimization target to derive control strategies for two equipment types. Results show that the framework effectively integrates dispatch and control strategies without oversimplifying the system model, proving its applicability in various scenarios with diverse resource compositions.