The Trading Strategy of Distributed Energy Storage Participating in Energy and Frequency Modulation Market

With the deepening reform of the electricity market in China, the study focuses on incentivizing distributed energy storage to provide frequency modulation ancillary services to the power system through market-based mechanisms. The research investigates the transaction decision-making of distributed energy storage in the energy and frequency modulation ancillary services market. An overall trading framework for the energy and frequency modulation ancillary services market is proposed. A bi-level decision model is developed, considering both maximizing the revenue of distributed energy storage and minimizing system costs. A hybrid integer linear programming equilibrium solution algorithm is designed based on duality theory and KKT conditions conversion. The effectiveness of the proposed model is verified through case analysis. The results demonstrate that the revenue from distributed energy storage accounts for more than 50% of the total revenue in the frequency modulation market, and strategic bidding by distributed energy storage can increase its revenue.