Modeling the cooperation between neighboring VPPs: Cross-regional bilateral transactions

This paper provides a well thought view of the virtual power plant (VPP) concept from the cross-regional cooperation of neighboring VPPs to its potential trading benefits. For a smart power system, it is recognized that multiple VPPs can exist in a system, hence from an individual VPP' viewpoint, the cooperation with all physically-connected neighboring VPPs would be a golden opportunity for managing the risk of profit variability as well as achieving high profits. To this end, a decision making framework for medium-term self-scheduling of an individual VPP with the aim of exercising arbitrage between two different trading floors, bilateral contracts and the pool, is proposed. Moreover, an efficient risk management approach based on the concept of second-order stochastic dominance constraints (SOSDCs) is used to enable informed decision making under different levels of uncertainty. This method is clearly discussed in an easy to follow way. Finally, the efficiency of the proposed model is analyzed through a detailed case study, and thereby relevant conclusions are drawn.