With the increasing utilization of natural gas-fired power plants, efficiency and even reliability challenges on both industries arise from the growing reliance on natural gas as fuel in the electricity sector and the increasing demand fluctuation in the natural gas sector. Following a brief review of the discontinuities, improvements are discussed to coping with the desired timely and cost-effectively gas supply in the electricity day-ahead market scheduling. Inspired by its successful implantation in the electricity market, the locational marginal pricing mechanism is applied to the natural gas day-ahead market. Moreover, the bidding strategy for general gas demand utilities is provided while considering the potential applicability of demand response (DR) which is also practiced in the electricity market. The formulations are represented as bilevel problems of each corresponding market, of which upper level problems maximize the participants’ profit, while the lower level problem renders the market clearing with schedules and locational marginal prices. Then, a coevolutionary algorithm is proposed to find the equilibrium of the two coupled markets with integrated participants. Results show that the proposed methodology with synchronized intraday time intervals and DR abilities could provide higher efficiency for the natural gas market, which will help the electricity market better coordinated to provide flatter price signals while scheduling more renewable energy sources.
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