Two-stage risk assessment of the electricity retailers in the day-ahead energy and primary-secondary reserve markets with flexible demand responses and parking lots

Abstract

The main entities in the deregulated environment are electricity retailers that can directly connect with the demand consumers and power producers. One of the markets that retailers are willing to participate is the primary and secondary reserve markets. This article aims to deal with the retailer's self-scheduling problem that aims to maximize their performance in both reserve and energy markets while minimizing their financial risks. To participate in these markets, retailers need flexible resources like demand response programs (DRPs) and electric vehicle parking lots, which are considered. Under this situation, electric retailers are subjected to different uncertainties related to the difference in vehicles' behaviors, such as arriving and departure times and the percentage of the initial state of charge, the difference in characteristics of EV's batteries due to the variety of factory brands, and also the markets-based uncertainties. In addition to the mentioned uncertainties, EVs' similarities in battery characteristics and behavior patterns of owners are also considered in the scenario generation procedure. Modeling the worst realizations of uncertainties significant impacts electricity retailers' decision-making on such extreme uncertainties; therefore, the downside risk constraints (DRC) methodology is used to model the financial risks of the introduced high-risk stochastic problem. Due to the high number of uncertain parameters, the generated scenarios are also reduced using a distance-based method. According to the obtained results, by accepting a 14 % lower profit, retailers can receive a strategy with close-to-zero risk levels. Besides, the participation of retailers in the fast reserve market is more suitable than the slow one due to higher prices.