Dynamic Overlapping Coalition Formation in Electricity Markets: An Extended Formal Model

Abstract

The future power system will be characterized by many small decentralized power plants—so-called distributed energy resources (DERs). The integration of these DERs is vital from an economic and grid operation point of view. One approach to this is the aggregation of such DERs. The formation of coalitions as an aggregation method has already been examined in the literature and applied in virtual power plants, active distribution networks, and microgrids. The spread of DERs also increases the need for flexibility and dynamics in the power grid. One approach to address this can be overlapping coalitions. Therefore, in this paper, we first performed an analysis of related work and, in this context, found no work on overlapping coalitions for energy use cases in the literature. We then described a method for dynamic coalition formation, called dynamic coalition in electricity markets (DYCE), and analyzed how DYCE would need to be extended to include overlapping coalition formation. The extension includes the phases of product portfolio optimization and the actual coalition formation. Our analysis of DYCE shows that the methods used for the optimization of the DYCE sub-tasks are not suitable for overlapping coalitions and would have to be replaced by other methods in order to be able to form overlapping coalitions.