A Bi-Level Model for the Bidding Strategy of an Inter-Regional Electricity Trading Aggregator Considering Reliability Requirements and Transmission Losses

In countries with large-scale power systems and nascent electricity markets, the inter-regional electricity trading aggregators (IRETAs) are in charge of participating in inter-regional electricity trading (IRET) on behalf of the generators and loads within the region except for operating the regional power systems (RPSs). As price makers in IRET and system operators of RPSs, IRETAs should make their bidding strategies considering both the RPSs’ reliability requirements and the IRET’s transmission losses to ensure both the safe operation of RPS and the profits in the IRET, which cannot be handled by the current methods. Therefore, this paper investigates an approach to help IRETAs make comprehensive bidding strategies in the IRET. Firstly, a hierarchical framework for an IRETA to participate in IRET is introduced. Then a bi-level model is proposed, in which the optimal operation of RPS and the market-clearing process of IRET are regarded as the upper and lower-level problems. Specifically, the upper-level problem is modeled as a two-stage stochastic optimization problem considering both the fault states and the reliability requirements of RPS. Moreover, the non-negligible losses from the inter-regional electricity transmission are internalized in the lower-level problem to consider their impacts on the IRETA’s bidding strategy-making. The proposed bi-level model is nonlinear and transformed into a linear single-level one through the Karush-Kuhn-Tucker (KKT) conditions and the dual theory. Finally, simulations demonstrate that the bidding strategy formed by the proposed method reduces the number of buses exceeding the limit of reliability requirement by over 50% and cuts down the transmission loss by over 40% compared with the former works.