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Profit Allocation Strategy of Virtual Power Plant Based on Multi-Objective Optimization in Electricity Market

Author

Listed:
  • Yuqing Wang

    (Department of Economic Management, North China Electric Power University, Baoding 071000, China)

  • Min Zhang

    (Department of Economic Management, North China Electric Power University, Baoding 071000, China)

  • Jindi Ao

    (Department of Economic Management, North China Electric Power University, Baoding 071000, China)

  • Zhaozhen Wang

    (Department of Economic Management, North China Electric Power University, Baoding 071000, China)

  • Houqi Dong

    (Department of Economic Management, North China Electric Power University, Baoding 071000, China)

  • Ming Zeng

    (Department of Economic Management, North China Electric Power University, Baoding 071000, China)

Abstract

A virtual power plant (VPP) can aggregate distributed renewable energy and flexible load to participate in the electricity market as a virtual controllable assembly. This pattern can effectively avoid the bidding risk of users, and produce cooperation benefits such as reducing transaction costs. Reasonable profit allocation is the key factor to determine the formation and survival of a VPP, which means a reasonable allocation for the VPP’s market income among participating members. In view of that, this paper proposes a framework of profit allocation in VPPs based on cooperative game theory. Aiming at the competitive environment with multiple VPPs in the electricity market, a VPP’s profit allocation model based on bidding optimization is built, which considers multiple objectives such as fairness of profit allocation, stability of cooperation alliance, and attraction of participating members. Furthermore, a multi-objective evolutionary optimization algorithm based on reference points is introduced to solve the model. Then, a VPP composed of prosumers is taken as an example to carry out the emulation. The results show that all participating members can get satisfactory profit allocation. Its cost-saving ratio ranges from 7.82% to 18.66%, and it confirms that the proposed profit allocation method can encourage prosumers of small size to participate in the VPP cooperation effectively.

Suggested Citation

  • Yuqing Wang & Min Zhang & Jindi Ao & Zhaozhen Wang & Houqi Dong & Ming Zeng, 2022. "Profit Allocation Strategy of Virtual Power Plant Based on Multi-Objective Optimization in Electricity Market," Sustainability, MDPI, vol. 14(10), pages 1-22, May.
    • Handle: RePEc:gam:jsusta:v:14:y:2022:i:10:p:6229-:d:819958
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    References listed on IDEAS

    as
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    1. Pandey, Anubhav Kumar & Jadoun, Vinay Kumar & Jayalakshmi, N.S. & Malik, Hasmat & García Márquez, Fausto Pedro, 2024. "Multi-objective price based flexible reserve scheduling of virtual power plant," Renewable and Sustainable Energy Reviews, Elsevier, vol. 192(C).
    2. Arup Das & Subhojit Dawn & Sadhan Gope & Taha Selim Ustun, 2022. "A Strategy for System Risk Mitigation Using FACTS Devices in a Wind Incorporated Competitive Power System," Sustainability, MDPI, vol. 14(13), pages 1-21, July.

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