Energy Management in Smart Grids and Markets Optimization:
Energy Scheduling, Power Quality Improvement and Local Market Design Focusing on Physical Storage Rights

Dimitrios THOMAS

Supervisor: Prof. O. Deblecker Co-supervisor: Dr. C.S. Ioakimidis

PhD jury members: Prof. Marc Frère (UMONS), Prof. Johan Driesen (KU Leuven),
As. Prof. François Vallée (UMONS), As. Prof. Anthony Papavasiliou (UCL),
Dr Renato Lepore (UMONS), Dr Konstantinos Genikomsakis (UMONS)

This PhD thesis consists of two parts. The first part focuses on the development of energy
scheduling and power quality improvement algorithms (energy management systems) for
small-scale smart grids, known as microgrids. A microgrid may comprise distributed energy
resources (photovoltaic, wind, storage, etc.) and controllable loads (electric vehicles, heating,
ventilation, and air-conditioning, etc.). An energy management system (EMS) decides the
optimal planning and operation of methods to control both energy production and consumption
in a microgrid aiming at total cost reduction and improvement of energy efficiency. In order to
investigate the impact of renewable generation and load unpredictability on EMS operation, the
photovoltaic production and the electric load of the microgrid are modeled considering a broad
number of possible scenarios.

We further extend the EMS by developing an integrated tool for the cooperative evaluation of
optimal demand-response operation in a microgrid combined with a concurrent power quality
assessment. The unique characteristic of the developed tool is that it does not only provide the
optimal solution based on a specific operational objective, but it also ensures power quality
compliance for all microgrid components. In addition, we develop a binary-based framework
(incorporated in the optimization algorithm) to model the potential energy interaction between
the microgrid and any other interested entity (e.g., the distribution system operator or an
electricity utility company). The framework operates on the basis of financially – incentivized
power signals requests. Numerical results demonstrate the efficacy of the extended energy
management integrated tool in both achieving the economic objectives in scheduling
microgrid’s operation and in effectively mitigating its power quality issues.

The second part of this thesis focuses on the design of a local energy market which consists of
consumers, prosumers (customers who actively manage their own consumption and production
of energy), renewable producers, and energy storage (ES) owners. We specifically investigate
the position and the role of ES in such local energy markets (in day-ahead and real-time layers)
by implementing, among others, the concept of physical storage rights (PSRs). As a market
product, PSRs are provided by an ES owner and enable the local market participants to access
the ES. First, we investigate how ES owners can monetize their unused capacity in the form of
PSRs, while other market participants aiming at additional flexibility, compete to obtain the
PSRs on a short-term basis.

Afterwards, we examine whether the passive utilization of ES in the form of PSRs can result in
a less risky but the same profitable strategy for the ES owner, evaluating at the same time how
the total system cost is affected. In addition, we investigate how the decisions of the rest market
participants are affected by the position of ES in the local market. The most remarkable result
to emerge from the simulations is that in a risk-neutral setting, the payoff does not depend
on whether a storage owner maximizes expected profit from inter-temporal arbitraging
or from selling PSRs. Each business model is evaluated numerically through several
illustrative case studies.