Research on Optimizing Trading Strategy of an Electricity Retailer Considering Users’ Response under New Strategy of Electric Power System Reformation

Abstract

Under New Strategy of Electric Power System Reformation (NSEPSR), an electricity retailer decides its level of involvement in the contract market and in the spot market as well as the selling price offered to its clients with the goal of maximizing the expected profit at its acceptable risk level. Under time-of-use pricing, users will adjust their needs according to the price changes. How to determine the time-of-use electricity price and the power purchase strategy in the contract market and in the spot market while accounting for the profit of the retailer and users becomes an important topic. Based on the above reasons, this paper formulates the optimal pricing and dispatch problem of an electricity retailer as a bilevel programming model, in which the upper level maximizes the retailer’s benefit, while the lower level minimizes the cost of each electricity user. The model is transformed into a mixed integer linear program by jointly using the Karush- Kuhn-Tucker (KKT) optimality condition as well as the duality theorem of linear programming. Finally, a case is studied to analyze effect of risk preference and market price volatility on electricity retailer profit. The result can provide reference for the electricity retailer to make the purchase and sale strategy.