Allocating Ex-post Deviation Cost of Virtual Power Plants in Distribution Networks

Virtual power plants (VPPs) including distributed generation, energy storage, and elastic load are emerging in distribution networks. Multiple VPPs can participate in electricity market as an aggregated entity and effective cost allocation mechanism among VPPs is a crucial issue. This paper focuses on allocating ex-post cost of VPPs incurred by deviation between actual power and ex-ante schedule in a two-settlement electricity market. We obtain approximate quadratic formulation of ex-post deviation cost considering network loss and develop an analytical cost allocation algorithm based on cooperative game theory. The allocated cost is consistent with cost causation principle and provides VPPs with incentive for aggregation. The proposed allocation method and relevant theoretical result are evaluated and verified by numerical tests.