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Equilibria in the competitive retail electricity market considering uncertainty and risk management

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  • Kharrati, Saeed
  • Kazemi, Mostafa
  • Ehsan, Mehdi

Abstract

In a medium term planning horizon, a retailer should determine its forward contracting and pool participating strategies as well as the selling price to be offered to the customers. Considering a competitive retail electricity market, the number of clients being supplied by any retailer is a function of the selling prices and some other characteristics of all the retailers. This paper presents an equilibrium problem formulation to model the retailer's medium term decision making problem considering the strategy of other retailers. Decision making of any single retailer is formulated as a risk constraint stochastic programming problem. Uncertainty of pool prices and clients' demands is modeled with scenario generation method and CVaR (conditional value at risk) is used as the risk measure. The resulting single retailer planning problem is a quadratic constrained programming problem which is solved using the Lagrangian relaxation method and the Nash equilibrium point of the competitive retailers is achieved by successive solving of this problem for all the retailers. The performance of the proposed method is demonstrated using a realistic case study of Texas electricity market.

Suggested Citation

  • Kharrati, Saeed & Kazemi, Mostafa & Ehsan, Mehdi, 2016. "Equilibria in the competitive retail electricity market considering uncertainty and risk management," Energy, Elsevier, vol. 106(C), pages 315-328.
    • Handle: RePEc:eee:energy:v:106:y:2016:i:c:p:315-328
    DOI: 10.1016/j.energy.2016.03.069
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    References listed on IDEAS

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    5. Xinyi Xie & Liming Ying & Xue Cui, 2022. "Price Strategy Analysis of Electricity Retailers Based on Evolutionary Game on Complex Networks," Sustainability, MDPI, vol. 14(15), pages 1-17, August.
    6. Sen Guo & Wenyue Zhang & Xiao Gao, 2020. "Business Risk Evaluation of Electricity Retail Company in China Using a Hybrid MCDM Method," Sustainability, MDPI, vol. 12(5), pages 1-21, March.
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    8. Hui Wang & Congcong Wang & Wenhui Zhao, 2022. "Decision on Mixed Trading between Medium- and Long-Term Markets and Spot Markets for Electricity Sales Companies under New Electricity Reform Policies," Energies, MDPI, vol. 15(24), pages 1-23, December.
    9. Chen Zhao & Jiaqi Sun & Ping He & Shaohua Zhang & Yuqi Ji, 2023. "Integrating Risk Preferences into Game Analysis of Price-Making Retailers in Power Market," Energies, MDPI, vol. 16(8), pages 1-18, April.
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