Integrating local market operations into transmission investment: A tri-level optimization approach

The rise of Local Energy Markets (LEMs) and increasing local flexibility present a key research question: How do local flexibility and LEM operations impact merchant-regulated transmission investments? This paper introduces a novel tri-level framework to integrate local market dynamics into transmis...

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Vydáno v:Applied energy Ročník 378; s. 124721
Hlavní autoři: Xia, Yuxin, Savelli, Iacopo, Morstyn, Thomas
Médium: Journal Article
Jazyk:angličtina
Vydáno: Elsevier Ltd 15.01.2025
Témata:
Decision analysis
energy
Flexibility
Local energy markets
markets
social welfare
system optimization
Transmission investment
Tri-level optimization
Tri-level optimization
Local energy markets
Decision analysis
Transmission investment
Flexibility
ISSN:0306-2619
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Shrnutí:The rise of Local Energy Markets (LEMs) and increasing local flexibility present a key research question: How do local flexibility and LEM operations impact merchant-regulated transmission investments? This paper introduces a novel tri-level framework to integrate local market dynamics into transmission investment decisions. The framework models the sequential operations of the WSM and LEMs, adhering to their respective network constraints, and includes a regulatory mechanism that incentivizes profit-driven Transmission Companies (Transcos) to make social welfare maximizing investments while accounting for local refinement costs. The tri-level optimization problem is asymptotically approximated by a mixed-integer second-order cone programming problem. Our findings from three case studies reveal that the provision of local flexibility substantially reduces reliance on conventional energy generation supplies. Additionally, transmission investment decisions are influenced by the levels of flexible generation and consumers, while adhering to network constraints. Moreover, the tri-level model enhances Transcos’ awareness of the sequential interactions between the WSM and LEMs, enabling them to make investment strategies that are responsive to the changing dynamics of local markets. •Tri-level model integrates sequential wholesale and local market operations in merchant-regulated transmission planning.•Transmission investments consider local refinements and flexibility dynamics.•Reformulation of the tri-level model into an asymptotically approximated single-level problem.
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ISSN:0306-2619
DOI:10.1016/j.apenergy.2024.124721