An Integrated Profit Maximization Model for Retailers in Deregulated Energy Markets

Abstract

The profit maximization problem of the retailer is a subject of vital importance for its economic viability since it is influenced by many parameters. Once such parameter is the generation cost, i.e. the wholesale market price. The present paper proposes an integrated model for profit maximization that combines the solution of the economic dispatch problem in the generation side and the profit maximization problem in the demand side. With this approach, the market price is known in advanced and not simulated as a stochastic variable. The results of the study denote that the profit maximization is sensitive to parameters such as the elasticity of the consumers, the demand response model and the price limit. Thus, special a detailed parametric analysis is needed for these parameters to assess their influence on the level of the profits.