Interactive Robust Model for Energy Service Providers Integrating Demand Response Programs in Wholesale Markets

Demand response (DR) has become a key player in energy efficiency programs of current electric power systems. This paper presents an effective decision-making model for energy service providers with a focus on day-ahead electricity market participation and demand allocation in the distribution network. A two-step iterative framework is proposed to consider the mutual effects of the DR and market prices, in which unit commitment and economic dispatch problems are solved in the first step to determine the locational marginal prices, and successively DR program is applied in the second step to minimize the total cost of providing energy for distribution network customers. This total cost includes the cost of power purchase from the market and distributed generation units, incentive cost paid to customers, and compensation cost of power interruptions. To consider the unexpected behaviors of other market participants, prices are modeled as uncertainty parameters using the robust optimization technique. Simulation results demonstrate the significant benefits of the proposed framework for the strategic performance of energy service providers.