A Bi-Level Trading Model for Energy Storage System in Energy and Frequency Regulation Markets Considering Renewable Energy Participation

As an emerging type of power market entity, energy storage system can trade in both the electricity energy markets and ancillary service markets to generate revenue. With the continuous increase in new energy penetration rates, the market-oriented trading models for new energy are gradually improving, and their participation in power markets will inevitably affect the trading strategies of energy storage system. Therefore, this paper considers energy storage facilities as independent bidding entities and constructs a bi-level game model. The upper layer aims to maximize the revenue of the energy storage system and determine its bidding strategy; the lower layer realizes the joint clearing of the electricity energy market and frequency regulation ancillary service market, while considering the participation of new energy sources, e.g., wind and solar photovoltaic power in the joint market. Subsequently, the Karush-Kuhn-Tucker (KKT) conditions and strong duality theory are applied to transform the bi-level model. Finally, experiments based on a case study are conducted to assess the impact of renewable energy and its penetration proportion on the trading strategies of energy storage systems.