Swing Contract-Based Valuation for Distributed Energy Resources in Transactive Energy Systems: A Reinforcement Learning Approach
With the proliferation of distributed energy resources (DERs) and power grids with high fractions of renewable energy, market constructs are evolving to allow DERs to participate in multiple possible markets, at different levels of grid hierarchy. The effective participation of DERs in market environments is aided by swing contract-based pricing mechanisms, whereby DERs have a two-part compensation structure – one for their reservation/commitment and another for performancedriven ex-post payment for their actual mobilization during dispatch. In this paper, we propose a reinforcement learningbased (Q-learning) approach that allows a rational DER agent to select the market it wants to participate in within a composite market environment where individual markets are coordinated by possibly different actors. The proposed Q-learning framework aids DERs in their self-valuation by implicitly maximizing their own payoff through market participation, assuming a swing contract-based compensation structure. We complement our work through simulation-based investigations where factors affecting the DER decision making process, such as parametric uncertainties in market (and grid) environments, are studied.