Robust purchase and sale transactions optimization strategy for electricity retailers with energy storage system considering two-stage demand response

Abstract

A new two-stage demand response is designed for the electricity retailers with energy storage system (ESS-ER) in the deregulated power market. The ESS-ER could response to the output of different power sources by adjusting the charging-discharging behavior according to the bidding power price. The paper models the two-stage demand response for electric power retailers and proposed a two-layer coordinated optimal model for the purchase and sale of the electric power retailers. In the upper layer model, the conditional value at risk method and robust stochastic theory are applied to describe the uncertainty influence of wind power and Photovoltaic (PV) power, and the minimum whole cost of power purchasing is taken as the objective. In the lower-layer, the power consumption behaviors of different customers are considered to get the maximum revenue of power selling by implementing differentiated demand response. Then, to solve the two-layer mathematical model, the lower-layer model is converted into the Karush-Kuhn-Tucker (KKT) optimality conditions. The results show that: (1) The two-stage demand response could smooth the curves of power purchasing and terminal users’ load, which could bring more flexible transaction space. (2) The proposed two-layer transaction model could balance the cost and risk of power purchasing, bringing more trading opportunities for wind power and PV, which can also reduce the energy consumption cost of the end-users. (3) By introducing the risk cost coefficient, confidence degree and robust coefficient, the decision-makers can adjust the power trading behaviors, and establish the optimal power trading scheme in line with their expected situation. (4) When higher energy storage capacity is set, the efficiency of demand response rises. When the capacity ratio of wind to energy storage is 4:1, the efficiency of demand response reaches the best. When larger energy storage capacity is set, the demand response turns to be more effective. However, when the capacity ratio of wind and PV to energy storage is 4:1, the effect of demand response reaches the best. Overall, the proposed model could provide an effective tool for power retailers in China's electric power market.