This paper presents a new framework for the integration of aggregated distributed energy resources into wholesale electricity market. The proposed framework enables aggregators to optimize their participation in both energy and frequency control ancillary service markets, while preventing network violations and optimizing economic efficiency. Dynamic operating envelopes are used to include network constraints in the pricing strategy, ensuring that distributed energy resource operation at the distribution level aligns with the wholesale market operation and distribution network operational requirements. The proposed network-aware pricing allows aggregators to dynamically adjust the price for customers based on their allocated operating envelopes, incentivizing efficient energy utilization. Simulation results validate the effectiveness of the proposed framework, demonstrating significant improvements in aggregator profitability and customer cost savings. Specifically, implementing the dynamic pricing strategy increases aggregator profit by nearly 30%. Furthermore, the combined implementation of dynamic pricing and frequency control ancillary service participation leads to an overall revenue improvement of 42.3% for the aggregator compared to the baseline scenarios, including time-of-use and feed-in-tariff prices. • Integrates DOEs, dynamic pricing, and energy/FCAS in one framework. • Network-aware pricing aligns prosumer incentives with network limits. • Considering DSO, aggregator, AEMO, prosumer improve reliability and economic efficiency.
Golshanfard et al. (Sat,) studied this question.