Strategic Operation of a Virtual Energy Hub With the Provision of Advanced Ancillary Services in Industrial Parks

Coordinated operation of several industrial energy hubs (IEHs) to realize local energy management concepts at strategic points like industrial parks has attracted the attention of power grid operators worldwide. Deriving an operational model for integrating a large set of IEHs to trade energy in various markets is a fundamental challenge that has not yet been addressed. To overcome this research gap, this paper presents an optimal market participation strategy for a virtual energy hub (VEH) consisting of multiple IEHs and industrial consumers. The proposed strategy seeks to answer two questions: (1) how can a VEH operator minimize its operation cost when participating in different electricity markets, i.e., day-ahead market, real-time market, and local electricity market, as well as natural gas market? (2) how can ancillary services affect the economic performance of VEH? To address these questions, a two-stage robust-stochastic optimization model is proposed to minimize the total operation cost of VEH and compensate the operational risks associated with the existing uncertainties considering the operational limits of the power grid. To this aim, the advanced ancillary services, i.e., market-based demand response programs and transactive energy management, are used in line with the optimization problem. Furthermore, the role of the multi-supply facilities is included in the developed strategy to improve VEH flexibility. The feasibility of the proposed model is validated through a set of case studies on the modified IEEE 14-bus test system. Simulation results demonstrate that the total operation cost of the VEH decreases by at least 9.24% considering ancillary services.

Automated summary

The study proposes an optimal market participation strategy for a virtual energy hub to minimize operational costs and mitigate risks associated with uncertainties, while enhancing economic performance and flexibility through advanced ancillary services. The feasibility and effectiveness of the model are validated through case studies on the modified IEEE 14-bus test system. The strategy successfully reduces the total operation cost of VEH.