Research on Revenue Risk of Electricity Retailers Considering Demand Response

With the formation of the market-oriented competition pattern on the electricity selling side, the electricity retailers face vast risks caused by the electricity price uncertainty from the purchase and sale markets. It is urgent to optimize the revenue risk to improve the market competitiveness of the electricity retailers. Fortunately, the smart grid development provides technical support for demand response to participate in electricity market transactions. Considering demand response, we propose a novel model of electricity retailers’ revenue risk in this paper based on the conditional value at risk theory. In an illustrative example, revenue risks of electricity retailers with and without demand response are discussed. Simulation results highlight that the demand response based on the model can effectively reduce the risk of electricity retailers and highly enhance the profitability of electricity retailers.