(364c) Design and Optimization of Integrated Energy Systems with Market Interactions

In recent years, renewable energy grid integration has become increasingly important to address energy systems' decarbonization challenges. Integrated Energy Systems (IESs) can combine renewable generators with other technologies, such as battery storage, to overcome the availability and reliability shortcomings caused by the intermittent nature of renewable energy. However, designing and operating IESs is challenging because the decisions are made over different time scales and the complexity of the wholesale electricity market. Traditional 'price-taker' (PT) approximation has been widely used in IES optimization problems.PT takes price signals as inputs of the IES optimization model, assuming the IES market participation does not impact the market prices. Although the price-taker approach is easy to implement, it ignores the interaction between the IES and the market, thereby overestimating the IES's profitability[1, 2, 3]

Our work deep dives into quantifying IES-market interaction in optimizing IES. We compare the pervasive price-taker assumption against rigorous multiscale models [4] for optimal sizing and operation of a battery storage system

to retrofit a wind farm resulting in a firm IES. To further go beyond the price-taker, we use machine learning surrogate models to represent the IES-market interactions and show the accuracy of surrogate-embed optimization.

[1] Emmanuel, Michael Ikechi, and Paul Denholm. "A market feedback framework for improved estimates of the arbitrage value of energy storage using price-taker models." Applied Energy 310 (2022): 118250.

[2] Martinek, Janna, Jennie Jorgenson, Mark Mehos, and Paul Denholm. "A comparison of price-taker and production cost models for determining system value, revenue, and scheduling of concentrating solar power plants." Applied energy 231 (2018): 854-865.

[3] Jalving, Jordan, Jaffer Ghouse, Nicole Cortes, Xian Gao, Bernard Knueven, Damian Agi, Shawn Martin et al. "Beyond price taker: Conceptual design and optimization of integrated energy systems using machine learning market surrogates." Applied Energy 351 (2023): 121767.

[4] Gao, Xian, Bernard Knueven, John D. Siirola, David C. Miller, and Alexander W. Dowling. "Multiscale simulation of integrated energy system and electricity market interactions." Applied Energy 316 (2022): 119017.