Bi-level optimization of regional virtual power plants based on balancing group mechanism

Given the power system balancing challenges induced by high-penetration renewable energy integration, this study systematically reviews international balancing mechanism practices and conducts an in-depth deconstruction of Germany’s balancing group mechanism (BGM). Building on this foundation, this research pioneers the integration of virtual power plants (VPPs) with the BGM in the Chinese context to overcome the limitations of traditional single-entity regulation models in flexibility provision and economic efficiency. A balancing responsibility framework centered on VPPs is innovatively proposed and a regional multi-entity collaboration and bi-level responsibility transfer architecture is constructed. This architecture enables cross-layer coordinated optimization of regional system costs and VPP revenues. The upper layer minimizes regional operational costs, whereas the lower layer enhances the operational revenues of VPPs through dynamic gaming between deviation regulation service income and penalty costs. Compared with traditional centralized regulation models, the proposed method reduces system operational costs by 29.1% in typical regional cases and increases VPP revenues by 24.9%. These results validate its dual optimization of system economics and participant incentives through market mechanisms, providing a replicable theoretical paradigm and practical pathway for designing balancing mechanisms in new power systems.