Electricity-Aware Heat Unit Commitment: A Bid-Validity Approach. (arXiv:2005.03120v1 [eess.SY])
Coordinating the operation of combined heat and power plants (CHPs) and heat pumps (HPs) at the interface between heat and power systems is essential to achieve a cost-effective and efficient operation of the overall energy system. Indeed, in the current sequential market practice, the heat market has no insight into the impacts of heat dispatch on the electricity market. While preserving this sequential practice, this paper introduces an electricity-aware heat unit commitment model. Coordination is achieved through bid validity constraints, which embed the techno-economic linkage between heat and electricity outputs and costs of CHPs and HPs. This approach constitutes a novel market mechanism for the coordination of heat and power systems, defining heat bids conditionally on electricity market prices. The resulting model is a trilevel optimization problem, which we recast as a mixed-integer linear program using a lexicographic function. We use a realistic case study based on the Danish power and heat system, and show that the proposed model yields a 4.5% reduction in total operating cost of heat and power systems compared to a traditional decoupled unit commitment model, while reducing the financial losses of each CHP and HP due to invalid bids by up-to 20.3 million euros.