Abstract
This paper establishes a short-term decision model, based on robust optimization, for an electricity retailer to determine the electricity procurement and electricity retail prices. The electricity procurement process includes purchasing electricity from generation companies and from the spot market. The selling prices of electricity for the customers are based on time-of-use (TOU) pricing which is widely employed in modern electricity market as a demand response program. The objective of the model is to maximize the expected profit of the retailer through optimizing the electricity procurement strategy and electricity pricing scheme. A price elasticity matrix (PEM) is adopted to model the demand response. Also, uncertainty in spot prices is modeled using a robust optimization approach, in which price bounds are considered instead of predicted values. Using a robust optimization approach, the retailer can adjust the level of robustness of its decisions through a robust control parameter. A case study is presented to illustrate the performance of the model. The simulation results demonstrate that the developed model is effective in increasing the expected profit of the retailer and flattening the load profiles of customers.
Highlights
In emerging electricity markets, electricity retailers generally purchase electricity from generation companies and the spot market, and resell energy to customers [1,2,3]
This paper establishes a short-term decision model based on robust optimization for an electricity retailer: (1) to determine the optimal electricity procurement strategy from multiple generation companies and spot market, and (2) to determine the electricity selling prices for customers based on TOU pricing
The electricity retailer considered in this paper is a price-taker retailer since it only buys a small amount of electricity from the spot market, which means that its purchasing behavior in the spot market does not affect the spot prices
Summary
Electricity retailers generally purchase electricity from generation companies and the spot market, and resell energy to customers [1,2,3]. The stochastic programming model is presented in [10,11] to solve the problem of determining the optimal bilateral contracts and electricity prices for end-users. This paper establishes a short-term decision model based on robust optimization for an electricity retailer: (1) to determine the optimal electricity procurement strategy from multiple generation companies and spot market, and (2) to determine the electricity selling prices for customers based on TOU pricing. In this model, the retailer purchases the major portion of demanded electricity from generation companies, and purchases a small amount of electricity from spot market as supplementary.
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