With the establishment of the Japan Electric Power eXchange market (JEPX) and the Replacement Reserve market (RR), the demand-side response (DR) is encouraged to participate in daily system operation with traditional generation resources. Since electricity markets are generally day-ahead or hour-ahead auction markets where the actual price is announced after the bidding and clearing process, the DR owner needs to predict the market price in advance for the resources' optimal scheduling to maximize profits. However, due to the market mechanism and the characteristics of DRs, simply forecasting the market prices with minimum error values cannot guarantee a good profit for the DRs. This paper designs a cooperative bidding strategy that considers both DR's operation and market characteristics to maximize the profit when participating in the JEPX spot market and RR market simultaneously. Rather than treating the bidding strategy as a combined optimization problem, a novel criterion is applied to select the most profitable forecast result of the JEPX spot price, and an extra procedure to predict the sufficiency of the RR demand capacity is proposed. Results comparing the proposed cooperative bidding strategy and conventional co-optimization strategy are reported, and a significant economic improvement is observed through market simulation.
Cai et al. (Sat,) studied this question.