A Coordinated Bidding Strategy of Wind Power Producers and DR Aggregators Using a Cooperative Game Approach

The purpose of this paper is to analyze the profitability of wind energy and demand response (DR) resources participating in the energy and frequency regulation markets. Since wind power producers (WPPs) must reduce their output to provide up-regulation and DR aggregators (DRAs) have to purchase additional power to facilitate down-regulation, this may result in revenue loss. If WPPs coordinate with DRAs, these two costs could be reduced. Thus, it would be profitable for WPPs and DRAs to form a coalition to participate in the regulation market. To better utilize the frequency response characteristics of wind and DR resources, this paper proposes a cooperation scheme to optimize the bidding strategy of the coalition. Furthermore, cooperative game theory methods, including Nucleolus- and Shapley-value-based models, are employed to fairly allocate additional benefits among WPPs and DRAs. The uncertainties associated with wind power and the behavior of DR customers are modeled through stochastic programming. In the optimization process, the decision-maker’s attitude toward risks is considered using conditional value at risk (CVaR). Case studies demonstrate that the proposed bidding strategy can improve the performance of the coalition and lead to higher benefits for both WPPs and DRAs. Specifically, the expected revenue of the coordinated strategies increased by 12.1% compared to that of uncoordinated strategies.