Hybrid pricing based operation of coupled electric power and district heating networks

Coordinated operation of Coupled Electric Power and District Heating Networks (CEPDHNs) brings advantages as e.g., the district heating networks can provide flexibility to the electric power network, and the entire system operation can be further decarbonized through heat pumps and electric boilers using electricity from renewable energy sources. Still, today CEPDHNs are often not operated in a coordinated way causing a lack of efficiency. This paper shows, how efficient resource allocation is achieved by determining the power exchange between both networks over an aggregated market. We introduce a welfare-optimizing, market-based operation for a CEPDHN that satisfies operational constraints and considers network losses. The objective is to integrate uniform pricing market-clearing and operational constraints into one approach, in order to obtain high incentive compatibility for the market participants while preventing high uplift costs from redispatch. For this, we use a hybrid market model mainly based on uniform marginal pricing and additionally utilize pay-as-bid pricing for a fraction of the allocated bids and offers. We perform a case study with a real CEPDHN to validate the functionality of the developed approach. The results show that our solution leads to efficient resource allocation while maintaining safe network operation and preventing uplift costs due to redispatch. (C) 2021 Elsevier Ltd. All rights reserved.