Optimal Demand Response Bidding and Pricing Strategies for a Virtual Power Plant Operating in a Competitive Bi-Level Electricity Market

  • Ashot Mnatsakanyan

Student thesis: Master's Thesis


The deregulation of electricity markets enables flexible and efficient framework for generation companies to trade electricity in a competitive environment. New policies and incentives stimulate increased penetration of environmentally friendly resources. These caused the presence of more small and medium scale renewable generation units distributed all over the grid. However the variable nature of renewable energy sources (RES) and the lack of their centralized monitoring create challenges for the system operation affecting the active power balancing efficiency. The idea of aggregating distributed energy sources is emerging to the concept of virtual power plant (VPP) that enables their controllability and better representation to system operators. However energy trading mechanisms are not well established for these new market entrants, thus limiting the proper management of the aggregated energy portfolios. In this thesis we present new market structures enabling VPPs to participate in energy trades by offering both generation and demand response (DR) services. We developed several scenarios of combined aggregation and coordination of flexible loads coupled with distributed generation (DG). In particular new DR and advanced demand side management (DSM) models are applied in the context of VPP. Internal and external energy trades are enabled by introduction of bi-level market structures. The formulated optimization models capture all market interactions between participants optimizing VPP's bidding strategies in a day-ahead market environment.
Date of Award2013
Original languageAmerican English
SupervisorScott Kennedy (Supervisor)


  • Demand Response; Pricing Strategies; Virtual Power Plant; Electricity Market.

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