Strategic offering of producers in the day-ahead coupled gas and electricity market including energy and reserve models

Abstract The presence of gas-to-power (G2P) and power-to-gas (P2G) systems in the power system has led to the interdependency of gas and electricity energies. Thus, to increase energy efficiency and achieve desirable financial profit to the mentioned elements, an energy market and ancillary services combined by gas and electricity energies are required so that interdependency of electrical and gas energies and vice versa and the dependency of price to energy can be observable. Hence, this paper presents the strategic offering method for gas and electricity producers (GPs and EPs) in the coupled gas and electricity market as the day-ahead (DA) energy and reserve model. This strategy includes a two-stage problem, where the first stage contains a bi-level model that minimizes the difference between the expected operation cost and expected revenue of all strategic EPs (SEPs) in DA electricity energy and reserve markets subjects to the SEPs model in the upper-level. The lower-level problem minimizes the expected non-SEPs operation cost limited to DC optimal power flow equations, reserve, and non-SEPs formulation. The same problem with the first stage formulation is repeated for GPs in the second stage. Strategic GPs (SGPs) participation model in the DA gas energy and reserve markets presents in the upper-level problem but the market clearing price (MCP) method in the gas network expresses in the lower-level problem. This scheme includes uncertainties of demand and renewable power that are modeled by stochastic programming. The Karush-Kuhn-Tucker (KKT) approach obtains a single-level formulation in each stage, and thus, the master/salve decomposition algorithm solves the proposed strategy to achieve the optimal solution. Finally, this method is simulated on a standard test system to examine its capabilities. The numerical results obtained by the algorithm highlights that it can find the optimal solution in the least possible time considering the least computational errors. Furthermore, units with inexpensive fuel generally participate in the energy market following the proposed strategy; however, all units participate in the reserve market at all operating hours, which aims to achieve high optimal financial profit for the units. Following this, SEPs and SGPs in the mentioned market succeeded to obtain a profit of 37.5% and 13.6%, respectively, in their operating cost.