A Hybrid Mean Field Framework for Aggregators Participating in Wholesale Electricity Markets

Abstract

The rapid growth of distributed energy resources (DERs), including rooftop solar and energy storage, is transforming the grid edge, where distributed technologies and customer-side systems increasingly interact with the broader power grid. DER aggregators, entities that coordinate and optimize the actions of many small-scale DERs, play a key role in this transformation. This paper presents a hybrid Mean-Field Control (MFC) and Mean-Field Game (MFG) framework for integrating DER aggregators into wholesale electricity markets. Unlike traditional approaches that treat market prices as exogenous, our model captures the feedback between aggregators' strategies and locational marginal prices (LMPs) of electricity. The MFC component optimizes DER operations within each aggregator, while the MFG models strategic interactions among multiple aggregators. To account for various uncertainties, we incorporate reinforcement learning (RL), which allows aggregators to learn optimal bidding strategies in dynamic market conditions. We prove the existence and uniqueness of a mean-field equilibrium and validate the framework through a case study of the Oahu Island power system. Results show that our approach reduces price volatility and improves market efficiency, offering a scalable and decentralized solution for DER integration in wholesale markets.