To meet unbalanced demand, an energy provider has to include costly generation technologies, which in turn results in high residential electricity prices. Our work is devoted to the application of a bilevel optimisation, a challenging class of optimisation problems, in 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. | Yugoslav Journal of Operations Research xx (2018), Number nn, zzz–zzz DOI: A BILEVEL APPROACH TO OPTIMIZE ELECTRICITY PRICES Ekaterina ALEKSEEVA Sobolev Institute of Mathematics, 4 Prospekt Akademika Koptuga, Novosibirsk, Russia Luce BROTCORNE INRIA Lille - Nord Europe, Parc Scientifique de la Haute Borne 40, 59650 Villeneuve d’Ascq, France S´ebastien LEPAUL, Alain MONTMEAT EDF Lab Paris Saclay, 7 boulevard Gaspard Monge, 91120 Palaiseau, France ; Received: November 2017 / Accepted: February 2018 Abstract: To meet unbalanced demand, an energy provider has to include costly generation technologies, which in turn results in high residential electricity prices. Our work is devoted to the application of a bilevel optimisation, a challenging class of optimisation problems, in 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 optimise hourly electricity prices, taking into account consumers’ behaviour and minimizing energy generation costs. By choosing new pricing policy and shifting electricity consumption from peak to off-peaks hours, the consumers might decrease their electricity payments and eventually, decrease the energy generation costs. Keywords: Demand-Side Management, Electricity Market, Bilevel Optimization, Complementary Slackness Conditions. MSC: 90-06, 90C46, 90C90, 91A12. 2 E. Alekseeva, et al. / A Bilevel Model to Optimize Eletricity Prices 1. INTRODUCTION Increase in the power consumption might reach limits of the generated power. Moreover, some power generating units can take long time or may be very expensive to operate at full power. Thus, any load serving entity, for example, EDF - ”Electricity of France”, seeks tools to meet .
