A bilevel approach to optimize electricity prices

Abstract

To meet unbalanced demand, an energy provider has to include costly generation technologies, which in turn results in high residential electricity prices. Our work is devoted to the application of a bilevel optimisation, a challenging class of optimisation problems, in electricity market. We propose an original demand-side management model, adapt a solution approach based on complementary slackness conditions, and provide the computational results on illustrative and real data. The goal is to optimise hourly electricity prices, taking into account consumers' behaviour and minimizing energy generation costs. By choosing new pricing policy and shifting electricity consumption from peak to off-peaks hours, the consumers might decrease their electricity payments and eventually, decrease the energy generation costs.

A Decentralized Framework for the Optimal Coordination of Distributed Energy Resources

“…Therefore, the efficiency of a price-based DR mechanism is contingent on how price signals are computed and how users react to them. In [7]- [10], the DR problem is formulated as a Stackelberg game between an electricity retailer (leader) and electricity consumers (followers). This results in a bi-level problem wherein the retailer sets prices so as to maximize its own payoff, while accounting for consumers' optimal response to those prices.…”

“…This results in a bi-level problem wherein the retailer sets prices so as to maximize its own payoff, while accounting for consumers' optimal response to those prices. While authors in [8] and [10] focus on Time-Of-Use rates, Dynamic pricing is also considered in [7] and [9]. These works perform a reformulation of the bi-level program as a single-level Mixed-Integer Linear Program, which can then be solved using standard optimization software.…”

Ergodic control of a heterogeneous population and application to electricity pricing

“…Indeed, the revenue of the provider depends on the furniture cost, supposed to be an increasing function of the global consumption, see e.g. ( [17,18]). In this extended setting, we prove the existence and uniqueness of the solution, see Proposition 2.2.…”

Bi-Level Approach for Load Serving Entity’s Sale Price Determination under Spot Price Uncertainty and Renewable Availability

“…Consideration of the classes together is practically unacceptable as it leads to the same sale prices for both classes, irrespective of their different demand profile. Though dynamic sale prices in a bi-level framework are determined, spot price uncertainty and risk modelling are neglected [22]. LSE can target an assured level of uncertainty to maximise its profit, considering the fractile model [23].…”