Optimal Design of Time-of-Use Tariffs using Bilevel Optimization

In this paper, the optimal design of Time-of-Use tariffs is presented. The tariff design is formulated as a bilevel optimization problem. The upper level problem models the utility/network operator (leader) and sets the tariff, whereas the lower level problem models the consumer’s (follower) response to the set tariff. In the model, both the tariff rates and the tariff windows are controllable parameters, and the resultant problem is solved using a Genetic Algorithm. The tariff algorithm is simulated on a local Zürich network and the effect of Electric Vehicle charging on the tariffs is investigated.