Real-time energy exchange strategy of optimally cooperative microgrids for scale-flexible distribution system

• Optimal cooperative microgrid formation strategy for minimizing distribution loss (26–80% reduction).
• The microgrid coalition game is designed and analyzed by Coalitional Game Theory.
• Scalable for a large number of microgrids and computationally efficient.
• Applicable to (near) real-time operation due to lower computational and communicative complexity.

This paper presents an optimal coalition formation mechanism of microgrids in a smart distribution system and analyzes the characteristics from the coalitional game theoretical perspective. Microgrids coalitions can (1) minimize the energy burden and dependency on the utility grid, (2) minimize the overall grid network power loss, and (3) maximize intra-coalition energy transfer. In order to form cooperative microgrids, a Hierarchical priority based Coalition Scheme (HRCoalition) is proposed. Given an intra-coalition distance threshold, the proposed HRCoalition mechanism can provide the optimal coalition that achieves the aforementioned objectives. The optimality is realized by reaching a state of cooperative equilibrium for all microgrids and coalitions. The optimality of the formed coalitions is proved by Coalitional Game Theory. A Greedy based strategy is designed to perform network constrained energy exchange (GreedEnEx) within a formed coalition. Thus, HRCoalition provides a higher level optimization while, GreedEnEx yields system level optimization using output of HRCoalition. The proposed HRCoalition scheme is computationally very efficient and can scale up to a huge number of microgrids and thus makes it suitable for near real-time operation. An equivalent pricing mechanism is designed to provide a form of economic incentive to the microgrids participating coalition formation. The performance of the proposed method is reported to scale up to 500 microgrids with a loss reduction ranging from 26% to 80%. The provided numerical simulation results back the claim of optimality as well as prove the effectiveness of the proposed coalition formation method.