Strategic Behavior of a Distribution Company in the Wholesale Energy Market: A Risk-Based Stochastic Bi-Level Model

In active distribution grids (ADNs), a distribution corporation (Disco) can trade electricity with micro-grids (MGs) besides trading electricity with wholesale markets. Therefore, the operational flexibility of the Disco is increased so that it can play as a price-maker agent in electricity markets. To model the actions of Disco, a bi-level optimization method is developed where Disco problem is modeled at the upper-level problem, whereas the MGs problem together with the day-ahead market clearing procedure are modeled as the lower-level problems. To take the stochastic performance of green energy integration and loads into account, the Disco analysis is shown as two-stage stochastic problem, in which the Disco risk aversion is programmed considering the conditional value-at-risk tool. The subsequent non-linear bi-level approach is converted into a linear single-level approach through Karush-Kuhn-Tucker (KKT) conditions and dual theory. To validate the success of the proposed method, a 24-bus power system is used. Conclusions are duly drawn.