Developing a scenario-based demand response for short-term decisions of electricity retailers

This paper deals with short-term decisions made by electricity retailers. It is assumed that a retailer aims to minimize the cost of procuring energy from two sources: one is the commonly-used pool market, and the other is the demand response (DR) program proposed in this paper. A reward-based DR is mathematically formulated where the volume of load reduction is modeled as a stepwise function of offered incentives by the retailer. Furthermore, a novel scenario-based participation factor is developed here to take into account the unpredictable behavior of customers. The presented problem is formulated in stochastic programming where its feasibility is evaluated on a realistic case of the Queensland region within the Australian National Electricity Market (NEM). Additionally, we define four distinct cases to study the impact of uncertainties associated with both resources, particularly DR, on short-term decisions of the retailer.