Optimal retailer bidding in a DA market – a new method considering risk and demand elasticity

This paper presents a new method to determine the optimal demand function for a retailer in power markets. It assumes that the retailer purchases the energy from either the day-ahead or the regulation market and sells it to the end users through fixed and/or real-time pricing contracts. The load is assumed to be price sensitive and the retailer to be price-taker. Through participation in the market and managing its risk, the retailer attempts to maximize its profit. The proposed method is tested on a typical power market.

Research highlights
► Determination of the optimal demand function for a price-taker retailer in electricity markets.
► Modeling of fixed and real-time pricing contracts.
► Modeling the effect of load price elasticity on the retailer strategy for market participation.