Contents lists available at ScienceDirect Electrical Power and Energy Systems journal homepage: www.elsevier.com/locate/ijepes A bi-level model for optimal bidding of a multi-carrier technical virtual power plant in energy markets Mehdi Foroughi a , Ali Pasban a , Moein Moeini-Aghtaie a, ⁎ , Amir Fayaz-Heidari b a Department of Energy Engineering, Sharif University of Technology, Tehran, Iran b Sharif University of Technology, Tehran, Iran ARTICLE INFO Keywords: Technical virtual power plant Multi-carrier network Wholesale market Local heat market Distributed energy resource District heat Bi-level optimization ABSTRACT Distributed energy resources (DERs) play an important role in the future vision of distribution energy networks. This paper with the aim of promoting DERs role in energy markets proposes a new framework for the optimal bidding strategy of a Technical Virtual Power Plant (TVPP) in diferent markets. In the proposed framework, it is assumed that the TVPP energy power is distributed throughout a multi-carrier energy network (MCEN) which consists of district heat networks (DHNs) and a distributed electricity network (DEN). In the MCEN, CHP units are the linkage between DHNs and DEN. With the goal of maximizing the proft of TVPP in diferent local and wholesale energy markets, a bi-level optimization model is formularized to set scheduling of DERs. As the upper level, the TVPP sets the schedule of its DERs considering technical constraints of DHNs and DENs. In the lower level, however, the TVPP runs an optimization problem to estimate the energy price in wholesale energy markets considering the forecasted bids of other rivals. The proposed model is implemented on a test system and the results confrms that the local market creates an opportunity for CHP owner, TVPP and the heat consumers to make more proft as well as achieving better technical performance for distribution energy systems. 1. Introduction Recently, the use of Distributed Energy Resources (DERs) has in- creased in the distribution sector of power systems. These new re- sources are introduced in energy systems to elevate the efciency of power systems, improve the sustainability of energy delivered to cus- tomers and also reduce the pollution associated with energy systems [1]. They have been combined with traditional power plants, which remarkably have increased the diversity of energy resources. In this regard, energy frameworks should be seen as multi-carrier energy sys- tems in which electricity, heat, and gas systems are integrated together. The fexibility of these systems can improve the efciency of energy systems and provides more services for consumers [2]. Research in multi-carrier energy systems started in the late ’90s. Early works mostly focused on the technical aspect of multi-carrier energy systems so that they developed mathematical models and opti- mization algorithms for these systems [4–7]. However, the paradigm shift of multi-carrier energy systems is multi-faceted development. In fact, the presence of DERs in energy systems leads to some new technological, economic and regulatory is- sues [8]. Therefore, new concepts and players including micro-grids [8,10], energy hubs [2,11], and virtual power plant (VPP) [12] have been introduced to facilitate the role of DERs more efectively in energy systems. Their solutions are not about devising of any particular cou- pling point, but rather they propose systematic integration and optimal control of multi-carrier systems. These concepts are widely relevant to each other so that all three of them share some critical features, such as the ability to aggregate DERs and storage at the distribution level. However, microgrids and energy hubs typically only tap DERs at the retail distribution level whereas VPPs can also create a bridge to wholesale markets. What distinguishes a VPP from them is that the VPP is more concerned about how DERs can participate in the electricity markets. In fact, the VPP facilitates the participation of DERs in the electricity markets [13,14]. The VPP acts as an aggregator of DERs and independent consumers is connected to the upstream network. Upstream network can be su- pervised by an independent system operator (ISO). Therefore, the VPP with the aim of maximizing its proft coordinates the small-scale gen- erating units and the consumption to provide an opportunity to parti- cipate in energy markets [15]. The VPPs can be categorized into two general categories of com- mercial VPPs (CVVPs) and technical VPPs (TVVPs). The main distinc- tion between the CVPP and the TVPP is that the CVPP is an energy market player seeking to maximize its proft originated from the https://doi.org/10.1016/j.ijepes.2020.106397 Received 16 August 2019; Received in revised form 18 July 2020; Accepted 21 July 2020 ⁎ Corresponding author. E-mail address: moeini@sharif.edu (M. Moeini-Aghtaie). Electrical Power and Energy Systems 125 (2021) 106397 0142-0615/ © 2020 Elsevier Ltd. All rights reserved. T