Optimal demand response bidding and pricing mechanism with fuzzy optimization: Application for a virtual power plant

In this paper, a virtual power plant (VPP) that consists of generation and controllable demand is enabled to participate in the wholesale market. VPP makes renewable energy sources (RES) and distributed generations (DGs) controllable and observable to the system operator. The main objective is to introduce a scheme that optimizes the bidding strategies and maximizes the VPP's profit on day-ahead basis. To achieve this goal, the VPP trades energy externally with a wholesale market, and trades energy and demand response (DR) internally with the consumers in its territory. That is, when generation exceeds demand, the VPP sells the excess energy to the market, and it buys energy from the market when the generation and reduction in demand due to DR scheme are less than the required demand in its territory. Fuzzy optimization is proposed in this work to consider the uncertainty in the RES.