Hierarchical Decision Making for Aggregated Energy Management of Distributed Resources

This paper presents a bilevel model for describing the interdependence of decisions between a retailer/aggregator and the distributed resources owners that the former serves and represents. Decision making is performed in a hierarchical fashion. The retailer performs the energy management of various resources indirectly; price signals are used as incentives for inducing the entities owning the distributed resources in a behavior that optimizes the operation and economic profit of the microgrid that they compose. The two-level interaction is formulated mathematically as a mathematical programming problem with complementarity constraints, while nonlinearities are replaced by equivalent linear expressions. The results of a characteristic case study indicate the efficiency and scalability of the proposed model.