Strategic investment for district heating systems participating in energy and reserve markets using heat flexibility

The flexibility of district heating systems can be utilized to provide ancillary services for electric power and hence the investors make profits by taking advantage arbitrage in multiple markets. This paper proposes a strategic investment scheme system participating both electricity energy reserve markets, which enables enhanced decisions installation combined heat units, pumps, thermal storage. A new business model is proposed that acts as prosumer where region particularly modeled ensure feasibility deployed reserves. behavior bi-level optimization problem. upper-level problem determines capacities optimal offering/bidding strategies system, while lower-level represents market clearing over set representative days. converted into single-level mathematical program with equilibrium constraints using Karush-Kuhn-Tucker optimality conditions, then reformulated mixed-integer linear linearizing nonlinear terms. Simulation results demonstrate total operational costs are reduced strategically offering investor prefers invest storage shave peak load units increase system’s other than pumps. effectiveness feasible deployment also verified.