Abstract: As a future trend in developing pumped storage, its variable speed operation features fast two-way responses and betters its regulation performance. However, under the current market arrangements, fragmented pricing signals and decoupled bidding decisions across the power markets constrain the revenue potential of a variable-speed pumped storage plant (VSPS). This paper describes a game-based approach for the clearing of a VSPS plant that participates in the coupled electricity-frequency regulation-ramping markets. A Stackelberg bi-level model is formulated, where, at the upper level, the VSPS plant acts as the leader and maximizes its profit by submitting its price–quantity offers to each market, while at the lower level, the joint market operator minimizes the total system operating cost and clears market prices and awarded quantities. The bi-level model is reformulated as a single-level optimization model via the Karush-Kuhn-Tucker conditions, using the McCormick envelopes to linearize the bilinear revenue terms. Case studies show that, in multi-product trading settings, our new approach reduces system operating costs effectively, and reveals and quantifies the flexibility value of VSPS in ancillary services, increasing the plant revenues significantly.

Key words: variable-speed pumped storage (VSPS), ramping market, Stackelberg model, Karush-Kuhn-Tucker conditions, McCormick envelopes