Strategic Planning of Power to Gas Energy Storage Facilities in Electricity Market

This paper proposes an approach for optimal planning of the power to gas energy storage facilities faced by a strategic investor in an electricity market while considering the network constraints. The proposed approach relies on a bi-level programming model whose upper-level problem determines both investment and bidding decisions to maximize the expected profit of the investor and the lower-level problem corresponds to the electricity market clearing. The bi-level model is transferred into a mathematical program with equilibrium constraints through replacing the lower-level problem by its optimality conditions. The resulting nonlinear mathematical program with equilibrium constraints is linearized by using the duality theory and Karush-Kuhn-Tucker optimality conditions. The mixed-integer linear programming problem is solved using GAMS with CPLEX solver. Results pertaining to an illustrative example and a case study are reported and discussed, which validate the proposed approach.