Risk-based Offering strategy for a retailer in a wholesale and local electricity market considering demand response

Document Type : Article


Faculty of Electrical and Computer Engineering, Babol Nooshirvani University of Technology, Babol, Iran


Uncertainties in wholesale market prices and consumer demand pose serious risks to electricity re-tailers. The penetration of distributed energy sources (DER) along with responsive demand has made it possible to exchange energy in distribution networks under a local market-based frame-work. These local markets provide a good opportunity for retailers to participate in meeting the needs of consumers, so that they can improve their economic situation by influencing local market prices through demand response (DR). Thus, the issue that need to be addressed is how the interac-tion of electricity retailer in the local market can affect its economic situation. This paper proposes a new framework to assist electricity retailers in optimizing the offering strategy in both wholesale and local electricity markets under uncertainty. The proposed framework is based on stochastic bi-level optimization model. At the upper level, with the aim of maximizing profit of retailer, optimal decisions are made on the power purchased from wholesale and local markets. At the lower level, the local market is ignored in which, with the aim of minimizing the operating cost. Wholesale mar-ket price uncertainties and the production of renewable resources are modeled using a set of sce-narios.