Efficient clustering of DERs in a virtual association for profit optimization

The Feed In Tariff policy (FIT) used for accelerating renewable energy investments cannot be retained as a sustainable business model for the future smart energy grid. It is also evident that the current centralized electricity market
prevents small or very small energy producers, who usually generate energy by renewable means, to participate. In this paper, addressing the aforementioned problems, at first, we present a decentralized architecture (Virtual DER Clusters),
where small Distributed Energy Sources (DERs) are united in coalitions, each participating in the market as a single entity. Then, efficient clustering algorithms are proposed based on a min-max optimization policy in order to dynamically derive the cluster that best satisfies coalition’s goals. Maximization in the sense of increasing as much as possible the profits of small-scale energy producers. Minimization in the sense of creating dynamically most competitive clusters. In this paper, three clustering policy schemes are discussed, each presenting different advantages with respect to the contradictory benefits
between DERs and power utilities. From the examined policies, a fair sharing allocation scheme seems to be a good compensator between the electricity market and the small-scale players.