Retailer risk-based trading decision making model under price responsive demand

Abstract

This work addresses the problem of an electricity retailer who manages two sides of trading; optimal procurement of electricity from wholesale market to minimize the procurement cost and optimal selling price calculation considering a price responsive demand, to maximize revenue. On the procurement side, retailer faces uncertainty of pool electricity price and at sell side, it sets selling price based on the elasticity of its consumer demand. The work contributes by highlighting the impact of demand behavior on a retailer's decision making for different price elasticity and providing informed decision support under pool price uncertainty to address different risk-averse nature of retailers.