Stochastic minimization of imbalance cost for a virtual power plant in electricity markets

In this paper, we investigate the optimal real-time operation strategy for a virtual power plant (VPP) to reduce its imbalance cost when participating in a competitive electricity market for energy. To capture the intrinsically stochastic nature of renewable power generation and market prices, the problem is formulated as a stochastic program. The decisions in the balancing market include actual renewable power usage and flexible demand management. Our model ensures that a certain portion of the renewable power generation will be utilized. A Lyapunov optimization based algorithm, which does not require the knowledge of probability distributions of the related random processes, is proposed to solve the problem. Both analytical and numerical results are presented to illustrate the effectiveness of the proposed algorithm.