A Hierarchical Price-Based Demand Response Framework in Distribution Network

Abstract

In the evolving local retail electricity market hierarchy, demand response providers (DRPs) are becoming viable interlink for the interaction between distribution system operator (DSO) and customers in demand response (DR) assessment in distribution network. This hierarchical structure is rendered in price based DR and is suggested as the proposed study. It is formulated as a tri-level two-stage DR in a theoretic game framework using two-loop Stackelberg game. In first stage, DSO (leader) and DRPs (followers) interact to determine optimal dynamic retail price, while optimizing their interests independently and in second stage, DRP as leader sets its optimal dynamic price to the customers (followers) for inducing DR. The existence and uniqueness of Stackelberg equilibrium is confirmed using backward induction and validated the optimality theoretically. It is formulated as nonlinear program with the consideration of ac network operating constraints. A nested reformulation and decomposition algorithm as a solution method is designed and is implemented to solve the problem. It is illustrated on IEEE 33-bus and a real 108-bus Indian distribution system. The detailed numerical results demonstrate the effectiveness of the proposed model and, scalability and tractability of the algorithm to solve the large scale problem reasonably.