Optimal coupling of heat and electricity systems: A stochastic hierarchical approach

The large penetration of renewables in the power system increases the need for flexibility. Flexibility gains and wind curtailment reduction can be achieved through a better coordination with other energy systems, in particular with district heating. Loose interactions between these two systems already exist due to the participation of CHPs in both markets. New market structures must be developed in order to exploit these synergies. Recognizing the above-mentioned challenges this paper proposes a stochastic hierarchical formulation of the heat economic dispatch problem in a system with high penetration of CHPs and wind. The objective of this optimization problem is to minimize the heat production cost, subject to constraints describing day-ahead electricity market clearing scenarios. Uncertainties concerning wind power production, electricity demand and rival participants offers are efficiently modelled using a finite set of scenarios. This model takes advantage of existing market structures and provides a decision-making tool for heat system operators. The proposed model is implemented in a case study and results are discussed to show the benefits and applicability of this approach.