Cooperatives of distributed energy resources for efficient virtual power plants

The creation of Virtual Power Plants (VPPs) has been suggested in recent years as the means for achieving the cost-efficient integration of the many distributed energy resources (DERs) that are starting to emerge in the elec-tricity network. In this work, we contribute to the development of VPPs by offering a game-theoretic perspective to the problem. Specifically, we de-sign cooperatives (or “cooperative VPPs”—CVPPs) of rational autonomous DER-agents representing small-to-medium size renewable electricity pro-ducers, which coalesce to profitably sell their energy to the electricity grid. By so doing, we help to counter the fact that individual DERs are often ex-cluded from the wholesale energy market due to their perceived inefficiency and unreliability. We discuss the issues surrounding the emergence of such cooperatives, and propose a pricing mechanism with certain desirable prop-erties. Specifically, our mechanism guarantees that CVPPs have the incen-tive to truthfully report to the grid accurate estimates of their electricit