Operation Model for Utility-Microgrid Interaction

This study presents an operation model for utility-microgrid interaction. Like in the traditional power system, energy trading of private microgrid ownership in the distribution systems is expected to grow in the foreseeable future through bilateral arrangements. For effectively engaging the microgrid owners, the utility allows it to operate under long-term cost-of-service agreements as well as levelized energy costs to guarantee the microgrid's financial investment recovery. However, to enable the microgrid to increase its energy trading opportunity in the distribution network, the proposed operation model loosens the microgrid's sensitivity to operation uncertainty and penalty of not meeting its energy delivery expectation through provisioning utility-based ancillary services for mutual benefits. The effectiveness of the operation model is demonstrated on a modified IEEE 33 bus system having one utility, six interconnected microgrids, and an upstream energy market. The results presented show that the microgrids increased revenue by 5.8% while the utility's operation cost was reduced by 10.2% over the entire operation horizon.