Co-optimization Model of Energy and Auxiliary Service Market Considering Opportunity Cost

The co-optimization of energy market and auxiliary service market can achieve the best economic efficiency in consideration of security constraints. Opportunity cost should be considered when a resource that provide energy market only is backed down to provide both energy and auxiliary service market. This paper first gives the definition and calculation method of opportunity cost. On this basis, considering market demand and unit output constraints, a co-optimization model considering opportunity cost is constructed. Then, this co-optimization model is transformed into an equivalent mixed integer linear programming model. Finally, numerical simulations are carried out to validate the effectiveness of the proposed model base on the IEEE 39 system. The results demonstrate that the proposed model reflects the real price in the regulation market and increases market efficiency.