Pricing strategy of inertia and frequency regulation services considering diversity of energy resources

The ever-increasing penetration level of wind and solar generation has been diminishing system inertia and introduced significant variability and uncertainty in the generation sector, posing new challenges to frequency stability. To address these issues, coordinated control of distributed energy resources (DERs) and energy storage (ES), mediated by virtual aggregators (VAs), is proposed to provide frequency regulation services as well as enhance overall system flexibility and reliability. This paper formulates a bi-level pricing model for inertia and frequency response (FR) between the transmission system operator (TSO) and VAs, incorporating innovative considerations of response delays and differentiated inertia support capacities across various resource types to actively incentivize diverse resource participation in frequency regulation. Through binary relaxation, primal-dual formulation, and Karush-Kuhn-Tucker (KKT) optimality conditions, the bi-level model is transformed into a mixed-integer quadratic programming (MIQP) problem. The IEEE 30-bus power system is employed to demonstrate the proposed method, and it is revealed by simulation results that there is a positive correlation between energy price change rates and those of inertia and FR prices under consistent unit commitment (UC) states, with response delays exerting significant influence on inertia and fast frequency response (FFR) pricing.