# Energy Trading Strategy for Heat and Electricity-Coupled Microgrid Based on Cooperative Game
###### Abstract  
This paper proposes an energy trading framework for a combined heat and power (CHP) microgrid (MG) integrated with a Photovoltaic (PV) generation system. The parties involved in the CHP-MG energy market are a single MG operator (MGO) and multiple users with electric and thermal demand response (DR). The energy trading process between the MGO and users is formulated as a Nash bargaining game, where the users can bargain with the MGO regarding trading volumes and the prices of electricity and heat. The relationship between the Nash bargaining solution (NBS) and social welfare maximum is studied. A distributed optimization algorithm based on the alternating direction method of multipliers (ADMM) is adopted to achieve NBS. Case studies demonstrate the effectiveness of the proposed trading framework, and show the promotion of economic benefits. combine-heat and electricity system; hybrid demand response; energy trading; cooperation game +
Footnote †: journal: _Applied_  
Furthermore, demand response (DR) is regarded as another effective way to improve the efficiency of energy utilization in MG, where end users can participate in the energy management of MG by responding to the energy prices or incentive mechanism [11]. DR achieves the role transition of end-users from passive energy consumers to active participants, who can adjust the size and operation time of load demand. Reference [12] proposes a multiparty energy management framework for the joint operation of CHP and PV consumers with price-based DR. Reference [13] proposes a DR program implemented in the stochastic programming of MG. The amount of responsive load can vary at different time intervals. By using DR, the energy management of MG can be modeled as an inner energy market with multi parties, in which the MGO is designed as an energy retailer, and the end-users are energy buyers [14]. However, by applying smart equipment in utility infrastructure, energy consumers can adjust the thermal load demand according to the comfortable degree of the indoor environment [15]. Study [16] indicates that the adaptive thermal loads can be modeled as a DR solution for a future power grid. For CHP-based MG, the thermal DR could be considered inside to further improve the response ability of the end user. Thus, the management of MG energy will become more complex, differing from solely electricity energy management. For simplification, the heat- and electricity-coupled DR is defined as hybrid DR, which is rarely studied. In [11], a hybrid DR model based on shiftable electric and cuttable thermal loads is constructed in a CHP-based MG. The energy trading between MGO and hybrid DR users is modeled as a Stackelberg game, where the MGO determines the prices of electric and thermal energy, and users respond to the prices by shifting the electric demands and cutting off thermal demands. In [17], the hybrid DR is applied to MGs, which participate in electric and thermal energy sharing in the distribution network. In this paper, a Nash bargaining cooperation game model was built to solve the multiparty energy management of CHP-based MG with hybrid DR. In [18], a generalized Nash game model is built in this paper to simulate the multi-round auction in combined heat and power market (CHPM), where the consumer demand curves are deduced from the partial derivatives of their payoff functions, and the thermal comfort of the consumers is considered in their payoff functions. In [19], an energy management framework is established for a multi-energy industrial park based on Stackelberg game theory, where the leaders and the followers are combined heat-and-power (CHP) unit owners and a group of industrial users. Compared with the non-cooperation strategy in [11], the Nash bargaining cooperative game can yield a Pareto-efficient and fair outcome, and also effectively improve the economic benefits of game players.