Network-constrained bidding optimization strategy for aggregators of prosumers

Abstract The large-scale deployment of smart home technologies will unlock the flexibility of prosumers, which in turn will be transformed into electricity market services by aggregators. This paper proposes a new network-constrained bidding optimization strategy to coordinate the participation of aggregators of prosumers in the day-ahead energy and secondary reserve markets. This bidding optimization strategy consists of a decentralized approach based on the alternating direction method of multipliers, where aggregators negotiate with the distribution system operator to obtain network-constrained energy and secondary reserve bids. For a case study of 2 aggregators and 1 distribution system operator, the results show that the network-constrained bidding strategy computes cost-effective and network-feasible energy and secondary reserve bids, as opposed to a network-free bidding strategy. In addition, the network-constrained bidding strategy preserves the independent roles of aggregators and the distribution system operator, and the data privacy of all agents.