Bidding Strategy for Compressed Air Energy Storage in Combined Heat and Power Market Based on Stackelberg Game

The coupling of power and heating systems can promote renewable energy integration and improve the comprehensive efficiency of the energy system. Advanced adiabatic compressed air energy storage (AA-CAES) is a large-scale clean energy storage technology with the potential for multi-energy co-storage and supply, which can serve as an energy hub integrating power and heating systems. However, the current bidding mechanism for AA-CAES participating in electricity and heating markets as an independent entity remains unclear, and traditional modeling mostly adopts battery-like energy storage models, leading to difficulties in accurately measuring economic benefits. To address this, this paper proposes a leader-follower game-based bidding strategy for AA-CAES considering combined heat and power supply. Firstly, a combined heat and power mathematical model of AA-CAES is established by accounting for the operational characteristics of each component. Secondly, a single-leader-dual-followers leader-follower game framework is constructed, where the upper layer optimizes bidding parameters with the goal of maximizing AA-CAES’s profit, and the lower layer achieves market clearing with the objective of maximizing social welfare. To solve the challenge of solving the bi-level nonlinear model, the Karush-Kuhn-Tucker (KKT) optimality conditions and binary expansion linearization method are adopted to convert it into a single-level mixed-integer programming problem. Finally, case simulations show that AA-CAES’s profit from participating in both markets increases by 30.6% compared with participating only in the electricity market. The parameters of its own components have a significant impact on profits—especially a 10% improvement in the isentropic efficiency of the turbine can increase total profits by 28%. This study provides key references for the market operation and parameter optimization of AA-CAES.