A Bilevel approach to optimize electricity prices

Abstract

To meet unbalanced demand an energy provider involves costly
generation technologies which in turn result in high residential
electricity prices. Our work is devoted to the application of a
bilevel optimization, which is a challenging class of optimization
problems in the electricity market. We propose an original demand-side
management model, adapt a solution approach based on complementary
slackness conditions and provide the computational results on
illustrative and real data. The goal is to optimize hourly
electricity prices taking into account the consumers' behavior and
minimizing energy generation costs. Choosing new pricing policy and
shifting some consumption from peak to off-peaks hours the consumers
might decrease their electricity payments and eventually decrease
the energy generation costs.