Stochastic-multiobjective market equilibrium analysis of a demand response program in energy market under uncertainty

•Analyze the impact of a demand response program under uncertainty.•Stochastic Nash-Cournot competition model is formulated.•Case study of the Taiwanese electric power market is conducted.•Demand response decreases power price, generation, and emissions.•Demand uncertainty increases energy price and supply risk in the results.

In the electricity market, demand response programs are designed to shift peak demand and enhance system reliability. A demand response program can reduce peak energy demand, power transmission congestion, or high energy-price conditions by changing consumption patterns. The purpose of this research is to analyze the impact of a demand response program in the energy market, under demand uncertainty. A stochastic-multiobjective Nash-Cournot competition model is formulated to simulate demand response in an uncertain energy market. Then, Karush-Kuhn-Tucker optimality conditions and a linear complementarity problem are derived for the stochastic Nash-Cournot model. Accordingly, the linear complementarity problem is solved and its stochastic market equilibrium solution is determined by using a general algebraic modeling system. Additionally, the case of the Taiwanese electric power market is taken up here, and the results show that a demand response program is capable of reducing peak energy consumption, energy price, and carbon dioxide emissions. The results show that demand response program decreases electricity price by 2-10%, total electricity generation by 0.5-2%, and carbon dioxide emissions by 0.5-2.5% in the Taiwanese power market. In the simulation, demand uncertainty leads to an 2-7% increase in energy price and supply risk in the market. Additionally, tradeoffs between cost and carbon dioxide emissions are presented.