Two-Stage Dynamic Alliance Bidding for Incremental Distribution and Retail Companies Based on Complex Network Theory

Abstract

With the increase in renewable energy penetration, energy deviation settlement penalties are imposed on incremental distribution and retail companies (IDRCs). Most IDRCs are at financial risk. Given this background, a bidding model of the two-stage dynamic alliance is proposed to maximize IDRCs’ profits. In the first stage, potential alliances of IDRCs are established by the gravity model. In the second stage, the bi-level bidding model is modeled in energy and primary frequency regulation markets, where the upper level maximizes alliance profits by considering the cooperation costs and alliance constraints, and the lower level simulates market clearing. Then, the bi-level model is transformed into a mixed-integer linear programming model by the strong duality theory, Karush–Kuhn–Tucker conditions, and large M method. Verified by the complex network theory, results show that a complex alliance network has a high transmission efficiency and capacity to resist risk. Moreover, IDRCs with large capacity and superior location are important in the alliance. In addition, the proposed model increases the satisfaction rate by 20%, which increases IDRCs’ profits and reduces cooperation costs.