A Stochastic Decision-Making Model for an Electricity Retailer with Intermittent Renewable Energy and Short-term Demand Response

This paper presents a short-term decision-making model for an electricity retailer with self-production of renewable energy. In the proposed model, a new trading mechanism for short-term demand response (DR) between retail customers equipped with smart grid technology and an electricity retailer is presented. Through the proposed trading mechanism, retail customers submit short-term DR offer curves to the retailer in order to increase or decrease their energy consumption for a given time period at favorable prices. On the other hand, the retailer decides its involvement in the short-term DR market for every time period to avoid unfavorable prices in the real-time market and, thus, maximize its profit. The stochastic nature of day-ahead and real-time prices, renewable energy production, electricity demand, and DR participation of retail customers is taken into account in the formulation of this work. The resulting model is a mixed-integer linear programming (MILP) which can be solved by existing commercial solvers. Case studies using real-world data are performed to demonstrate the effectiveness of the proposed model.