Residential customers-oriented customized electricity retail pricing design

Abstract

As the retail market becomes more competitive, it is significant for retailers to present a proper and attractive retail pricing strategy. This paper proposes a two-stage customized retail pricing design based on personalized demand response incentives for different residential users. To accurately simulate the load variation according to the price change, the real-time elasticity concept has been first introduced into the framework of customizing retail prices. The utilization of customizing prices is to make better use of the price elasticity to encourage the load shifting of end-users and their active engagement in demand response. In the first stage, the retail price base value is obtained by simultaneously optimizing the time-of-use (ToU) structure and corresponding price level. The second stage focuses on the load redistribution caused by individualized price incentives, and the retail price revision is set. The two-stage solution results are combined to obtain the final customized retail electricity price plans. To verify the feasibility and effectiveness of the proposed method, the customized retail pricing scheme is tested with 30 selected users. Compared with the traditional unified retail pricing method, the total retail profit increases by 10.62%, and the total retail conditional value at risk (CVaR) and consumers’ payment decrease by 27.69% and 3.82%, respectively through the proposed customizing retail price method. The numerical results prove that through the proposed retail pricing method the retailing profit has increased, while the consumers' payment and risk management have also been guaranteed.