Optimal strategy planning for a retailer considering medium and short-term decisions

This paper presents an optimal strategy for a retailer that procures its electric energy in an electricity market, involving both pool and bilateral contract. Additionally, this algorithm determines the optimal interruption policy and selling price. This algorithm divides retailer activities in two programs, medium and short-term program. The amount of energy purchased from the pool and the amount of interruptible load are determined by short-term program, while the quantity of energy bought from bilateral contract and selling price determination are medium-term decisions. Optimal decisions in short-term program are made based on the results of medium-term program. Medium-term program is monthly and short-term program is daily. The medium-term is a stochastic optimization problem due to the randomness of pool price and consumers demand and Monte Carlo simulation is adapted to solve that. The proposed methodology is tested on a realistic case study and retailer strategy in different cases has been compared.

► A new policy for a retailer considering medium and short-term decisions is developed.
► Retailer procures its energy via pool, bilateral contract and interruptible loads.
► Purchased energy from the pool and interruptible loads are short-term program decisions.
► Retailer offers selling price to consumers in medium-term planning horizon.
► Due to uncertainties in pool price and demand, medium-term program is stochastic.