Multi‐objective bi‐level optimisation to design real‐time pricing for demand response programs in retail markets

Electric energy consumption is progressively increased requiring new investments in the network to meet. Demand response programs (DRPs) are of practical tools to defer and/or decrease these investments. In this study, a real-time DRP is proposed to promote consumer participation in the energy delivery. The proposed DRP is designed on behalf of the Load Serving Entity (LSE) and aims to maximise its profit. The LSE purchases energy from the up-stream wholesale market and offers to the consumers in the retail market. The consumers, with the objective of maximising the profit, have the choice to purchase energy from the retail market or the LSE. The problem is formulated as a mixed integer linear bi-level programming model wherein LSE and aggregators, on behalf of the consumers, act as the leader and followers of the problem. Also, to avoid creating a new peak profile in light load periods promoted by the designed LSE prices, the upper level problem is tailored as a multi-objective formulation wherein flattening load profile in addition to the maximising LSE profit is considered. The proposed model is implemented on a test case and the results show that the both LSE and consumers benefit is increased with a smoother load profile.