Purchase Bidding Strategy for Load Agent With the Incentive-Based Demand Response

Abstract

Due to the development of intelligent electric devices and advanced metering infrastructures, demand response will be widely utilized in the trading of the electricity market and maintain energy balance of the power system. In this paper, a two-stage nested bilevel model for the optimal bidding strategy of a load agent (LA) with incentive-based demand response in day-ahead and balancing markets is proposed. In the upper-level model, the optimal trading strategy of the LA is formulated to maximize the operating profit of the LA in the day-ahead energy and balancing markets. On the other hand, the lower-level proposes the clearing market model of the independent system operator, which aim to maximize social welfare. The LA acts as a price-maker in the first-stage of the bilevel model, which is bilevel nonlinear programming (BNLP) problem. Karush-Kuhn-Tucker conditions and dual theory are used to transform the BNLP into single-level programming. The LA acts as a price-taker accepts the day-ahead energy clearing-price in the second-stage of the bilevel model, which is a bilevel mixed-integer linear stochastic programming problem. Finally, implementing the two-stage nested bilevel model on modifying the 8-bus power system demonstrates the applicability of the proposed model and analysis the sensitivity of the LA' profit to unit price and the committed reserve capacity demand of the day-ahead reserve market.

Keywords

• Load agent
• bilevel model
• stochastic programming
• incentive-based demand response