Optimal VPP operation strategy in liberalized electricity markets

The concept of the virtual power plants (VPPs) in smart grids is receiving a great deal of attention because of the following two potentials. One is that the virtual power plant can secure the power system by controlling the power for customers participating in the demand response program and the energy storage systems in order to maintain the power system operation. The other is that the virtual power plant can effectively integrate renewable energy sources (RESs) with the power system to increase the penetration level of RESs and provide different types of auxiliary services for system operations. Although the virtual power plant is of benefit to the power system, it would also be beneficial for VPPs operators to be able to quantify the earnable profit of such an operation. The aim of this paper is to present a methodology for determining the maximum profit for virtual power plants in liberalized electricity markets through optimal power flow by controlling the power for customers participating in the demand response program and the energy storage systems in the presence of RESs. With the proposed method, business owners can more effectively operate VPPs. The test results of a modified IEEE 37-node feeder test system are presented.