Abstract
In the restructured power industry, demand responsiveness is a key factor whose importance will be boosted due to the impetus provided by the development of smart grids. Within the context of pool-based electricity markets, this paper addresses the incorporation of price-responsive demand in multiperiod energy scheduling driven by consumer payment minimization. Although consumer payment minimization has drawn considerable attention mainly in an operational setting and also recently under a planning framework, available models and solution approaches typically neglect demand-side participation. The proposed scheduling model considers a marginal pricing scheme as well as the effects of both network constraints and intertemporal constraints associated with generation operation. Modeling demand-side participation leads to bilinear payment terms that significantly increase the mathematical complexity of the optimization process. The resulting problem is formulated as a mixed-integer nonlinear bilevel program for which no exact solution technique is currently available. This paper presents a novel methodology by which the original bilevel and bilinear problem is converted into an equivalent single-level mixed-integer linear program suitable for efficient off-the-shelf software. This transformation is based on the application of duality theory of linear programming, integer algebra, and Karush–Kuhn–Tucker optimality conditions. The proposed approach has been successfully applied to the IEEE 118-bus system.
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