Impact Assessment of Solar Integrated Residential Consumers on Retailer Decision-making

Abstract

Consumer demand is one of the major inputs to a retailer's profit-maximizing decision-making model. Any variation in consumer demand requires strategic changes in decisions made in the medium-term. The gradual increase in the use of solar renewable generation by consumers has the potential to modify the demand to be supplied by the retailer. Weather-dependent solar renewables may result in unprecedented variation in demand, which cannot be adequately reflected in demand forecasting based on historical data. Therefore, net demand needs to be considered as an input to the retailer's decision-making model. The proposed work investigates the impact of such scenarios to identify the changes required in the prevailing profit maximization strategies of a retailer. Additionally, the study attempts to draw implications for an evolving market where renewable energy is increasing to decarbonize power systems. The results indicate that the retailer's procurement strategy significantly changes, and the retailer has limited scope to modify sale prices that follow spot market prices. Retailer profit reduces due to a decrease in overall demand. Insights from the study imply the need for an exhaustive study focusing on consumers' evolving role as prosumers.