Flexibility Incentive Market Mechanism for Combined Frequency Regulation and Electricity Markets for the Power System with Distributed Energy Resources Aggregators via Modified Leiden Algorithm

Distributed energy resources provide local power as a supplement on the customer side. Recent rapid development of the distributed energy source enhances the clear energy production at the terminal of the power system. Whereas the small capacity of a single distributed energy source and the scaling of numbers pose difficulties for market design and clearance. In addition, the stochastic and quickly varying output power of the amount of (distributed) renewable energy sources increases the necessity for flexible regulation capacities. In response to the above issues, this paper develops a modified Leiden algorithm to aggregate distributed energy sources with similar regulation properties and connectives, avoiding complex power allocation strategies within the intra-aggregator and ensuring ordered power flow among inter-aggregators. Then, a bi-level market mechanism is proposed to highlight the regulation contributions of both distributed aggregators and conventional energy sources. The upper-level model optimizes the price of combined frequency regulation and electricity markets. The lower-level model regulates the output power of the aggregators and conventional energy sources. Furthermore, the modification of the bi-level model is proposed via the Karush–Kuhn–Tucker condition to ensure its solvability. The proposed market mechanism and the aggregating method are verified using a modified IEEE 30-bus system with IEEE 123-node test feeders and terminal-side energy resources. The results reflect the incentive impacts of the designed market mechanism and the effectiveness of the aggregating algorithm.