DER Aggregator Profit Allocation Using a Flexibility Index
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Solution Overview
Problem
Conventional profit allocation methods for aggregators with distributed energy resources (DERs) result in inconsistent profit shares for subscribers, making it difficult for them to understand their contribution and are computationally expensive, especially with large numbers of DERs and transactions.
Innovation Solution
A processor-implemented method and system that compute a flexibility index to quantify the flexibility offered by each DER, allowing for fair and efficient profit allocation based on this index, optimizing aggregator profit and reducing computational complexity.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of information
If conventional profit allocation methods are used, then profit distribution is achieved, but the profit shares vary considerably across days making it difficult for subscribers to understand their contribution
Solution Approach 1:
The patent introduces a flexibility index as a new parameter to quantify each DER's contribution to aggregator profit. This parameter remains stable across different days and market conditions, providing subscribers with a consistent metric to understand their contribution. The flexibility index is calculated based on the DER's ability to adjust its operation to maximize aggregator profit, rather than using variable profit shares that fluctuate with market conditions.
2Productivity
If conventional profit allocation methods are used, then profit distribution is achieved, but it is computationally expensive especially when there are hundreds of DERs and dozens of transactions
Solution Approach 1:
The patent extracts the core contribution metric (flexibility index) from the complex profit allocation problem. Instead of computing complex profit shares for hundreds of DERs across dozens of transactions, the method extracts a single flexibility index for each DER that captures its essential contribution. This extracted parameter simplifies the allocation computation while maintaining accuracy in reflecting each DER's value to the aggregator.
3Quantity of substance
If aggregators coordinate DERs to trade and provide services, then economies of scale and scope are achieved, but the computational burden increases with large numbers of DERs and transactions
Solution Approach 1:
The patent segments the complex aggregation problem into individual DER-level flexibility assessments. Instead of computing the interaction of all hundreds of DERs simultaneously, the method calculates a flexibility index for each DER independently based on its operational characteristics and potential contribution. This segmentation reduces the computational complexity from an O(n²) problem to an O(n) problem, enabling efficient coordination of large numbers of DERs.
Data Source
AI summary
This disclosure provides a system and method for flexibility based profit allocation for aggregator with distributed energy resources (DERs). The method of the present disclosure considers an aggregation model that allows an aggregator to orchestrate a set of heterogeneous DERs while enabling energy exchange among subscribed DERs and to participate in a day-ahead market. Further, a flexibility index is used to quantify the flexibility offered by a DER and a novel profit allocation model is proposed based on the flexibility index. Efficacy of the proposed models is demonstrated by evaluating their performance on a group of heterogeneous DERs using data traces from real-world electricity market.