Consensus-Based Approach to Day-Ahead Joint Local Energy-Reserve Market Design Considering Uncertainties of Renewable Energy

The penetration of distributed renewable generationprovides green energy to the local energy system. However, theuncertainties it brings to the system are becoming more andmore unacceptable, making it difficult to efficiently operate thelocal energy system. In a foreseeable future, there could bean increasing number of flexible resources, such as naturalgas power plants and interruptible demands, which providesolutions to these uncertainties. In this paper, a novel day-aheadenergy market design for the local energy system is proposed.This market allows its participants to trade day-ahead energyin a peer-to-peer approach. In addition, flexible resources canprovide up/down-ward reserves to the system through reservetrading, where the local system operator (LSO) takes chargeof reserve procurement. Then, to operate the market, a marketclearing model is proposed incorporating operating costs of theday-ahead and real time stages. A consensus-based approach isapplied which enables the market to clear in a decentralizedmethod. Finally, since the LSO bears the reserve procurementcosts as well as the operating costs in the real time stage,we then propose a cost reallocation model to transfer theexpenses to the renewables. Case studies demonstrate the validityand efficiency of the proposed market design, including localenergy trading facilitation, high and stable revenue preservation,high computation efficiency and prevention of strategic biddingbehaviors.