Risk-based bidding of large electric utilities using Information Gap Decision Theory considering demand response

• We investigate the effect of demand response on GenCo's bidding strategy.
• A proposed IGDT method is presented for risk management.
• The bidding formulation of a company consisted of generation facility along with a retailer part is presented.
• A linear programming format of IGDT method is presented.

The present study presents a new risk-constrained bidding strategy formulation of large electric utilities in, presence of demand response programs. The considered electric utility consists of generation facilities, along with a retailer part, which is responsible for supplying associated demands. The total profit of utility comes from participating in day-ahead energy markets and selling energy to corresponding consumers via retailer part. Different uncertainties, such as market price, affect the profit of the utility. Therefore, here, attempts are made to make use of Information Gap Decision Theory (IGDT) to obtain a robust scheduling method against the unfavorable deviations of the market prices. Implementing demand response programs sounds attractive for the consumers through providing some incentives in one hand, and it improves the risk hedging capability of the utility on the other hand. The proposed method is applied to a test system and effect of demand response programs is investigated on the total profit of the utility.