A stochastic Stackelberg problem with long-term investment decisions in Power-To-X technologies for multi-energy microgrids

Technologies providing flexibility options to power systems, such as Power-To-X (PtX) technologies, have become more important with the increasing deployment of distributed energy resources, particularly microgrids. However, uncertainty in renewable resources creates ambiguity regarding the necessary PtX capacity to install. This paper proposes a two-stage stochastic Stackelberg approach for multi-energy microgrids, focusing on long-term investment decisions in PtX technologies and hourly operational strategies. The Stackelberg problem considers microgrids as leaders (upper level) and the independent system operator as a follower (lower level). In the first stage, investment levels for various PtX technologies are determined as one-time decisions. The second stage focuses on hourly operational decisions, including the integration of microgrids with the independent system operator with marginal endogenous prices. The results provide insights into how uncertainty in renewable generation and electric battery levels affect investment levels. Larger hydrogen and thermal storage volumes lead to more flexible and self-sufficient microgrid systems. In scenarios with higher flexibility, microgrids can: (1) satisfy up to 10% of the independent system operator demand using renewable electricity and (2) regulate supply variability by storing excess generation during peak periods and releasing it during low generation periods.