Application of a new optimal operating strategy to a smart energy system in the de-regulated electricity market

Over the last years, the electricity sector has drastically changed due to an increasing penetration of renewable energy sources (RES). RES have a stochastic nature that can be predicted with a limited accuracy. This brings new challenges for the optimal operation of energy systems fueled by RES. Some studies in the literature show that the intermittent nature of RES can be smoothed by a proper coupling between renewable and conventional production units, responsive demand, or energy storages. In this study, an original optimal market offering strategy suggested by the first author is applied to an energy system fueled by both dispatchable and non-dispatchable renewable sources. The goal is to operate the system according to smart rules which allow the system to maximize profits (i.e. to operate it as a “smart energy system”). The system includes a photovoltaic system, two CHP internal combustion engines (bio-oil and bio-gas fueled), six woodchip boilers and both an electric and a thermal storage system. These units generate electricity and heat for a group of users having variable demands and trade electricity with the grid through a two-settlement electricity market (i.e. day-ahead and balancing). Market participation is of crucial importance, since the offers in the day-ahead market need to be submitted from 12 to 36 hours prior to real-time operation and influence the future optimal operation. Thus, all variables related to the operation of the “smart system” have been modeled as “recourse” decisions in the developed tool for optimal offers at the day-ahead stage. The offering strategy is tested against a deterministic alternative in a case study. Results show how a full information on the stochastic processes can help exploit synergies between the heat and electric systems, yielding to lower expected operating costs.