Risk-based optimal decision-making by the retailer in a mixed local and wholesale market environment considering demand response solution

Abstract

This paper proposes a comprehensive model to determine the retailer strategy for purchasing electrical power from the wholesale and/or local market in an active distribution network. The uncertainties associated with the load and distributed generation resources in the active distribution network, the wholesale market price and the behavior of the local market players, are all considered in the presented model. A retailer in the demand response program is employed as retailers’ ability to govern the risks. A risk-based decision-making scheme is provided in this paper which takes into account every instrument that is accessible for retailers along with their associated uncertainties. The major target of this paper is to maximize the retailer benefit concerning a tolerable risk. In order to model risks, the scenario theories are exploited and for solving the optimization problem, particle swarm optimization (PSO) has been utilized. The proposed scheme has been simulated on an actual network and the obtained results confirm the effectiveness and computability of this method.