Optimal Model for Electricity Retailer Considering Demand Response and Risk Management through Stochastic Formulation

Abstract

The electricity market is an economic environment of the power system in order to buy and sell energy in the presence of different players. One of the most effective part of electricity market is retail electricity market. Electricity price in the retail electricity market has a different rate for various types of customers. So, various retail prices are generally settled for different customers in the retail market. In power market, retailers purchase large volume of energy from power producers and sell it to customers. This paper from the retailer prospective while to encourage the customer to participate in priced-based demand response (DR) programs, proposes the nonlinear model by considering uncertainties in pool market and demand elasticity to decrease the energy procurement in hours with high pool prices.in the formulation of suggested stochastic model. Risk measurement of the proposed model is obtained by Value at Risk and Conditional Value at Risk. By applying the proposed model, electricity retailer will be capable to choose different risk-based strategies. The proposed model will lead to optimal management and decision-making of the retailer in purchasing from bilateral contracts and the pool market. Therefore, based on the suggested economic approach, the proposed model by considering the DR program reduces energy consumption during peak hours, which facilitates the supply of electricity to customers during these hours. Finally the case study is implemented in GAMS software and solved Via MINOS solver to observe the effectiveness and validation of the suggested model.