Treffer: A Scenario-Spatial Decomposition Approach With a Performance Guarantee for the Combined Bidding of Cascaded Hydropower and Renewables

This study develops a scalable co-optimization strategy for the joint bidding of cascaded hydropower, wind, and solar energy units, treated as a unified entity in the day-ahead market. Although hydropower flexibility can manage the stochasticity of renewable energy, the underlying bidding problem is complex due to intricate coupling constraints and nonlinear dynamics. A decomposition in both scenario and spatial dimensions is proposed, enabling the use of distributed optimization. The proposed distributed algorithm is eventually a heuristic due to non-convexities arising from the system's physical dynamics. To ensure a performance guarantee, trustworthy upper and lower bounds on the global optimum are derived, and a mathematical proof is provided to demonstrate their existence and validity. This approach reduces the average runtime by up to 35% compared to alternative distributed methods and by 57% compared to the centralized optimization. Moreover, it consistently delivers solutions, whereas both centralized and alternative distributed approaches fail as the size of the optimization problem grows.