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Designing electricity tariffs in the retail market: A stochastic bi-level approach

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  • Beraldi, Patrizia
  • Khodaparasti, Sara

Abstract

This paper presents a stochastic bi-level approach for tariff design in the electricity market where the leader is represented by a retailer and the follower by a residential prosumager, i.e. a consumer equipped with an energy system consisting of photovoltaic panels and a battery storage device. Both players solve an optimization problem subject to uncertainty in market prices, weather-related variables and electricity demand. To account for the retailer’s attitude towards risk, the upper level problem includes a safety measure to maximize. The model allows to determine a dynamic pricing scheme with time-variant rates delivering the average profit that can be gained in a given percentage of unfavorable realizations of the uncertain parameters and the optimal load pattern that minimizes the expected prosumager’s electricity bill.

Suggested Citation

  • Beraldi, Patrizia & Khodaparasti, Sara, 2023. "Designing electricity tariffs in the retail market: A stochastic bi-level approach," International Journal of Production Economics, Elsevier, vol. 257(C).
    • Handle: RePEc:eee:proeco:v:257:y:2023:i:c:s0925527322003413
    DOI: 10.1016/j.ijpe.2022.108759
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