A Bilevel Approach to Optimize Electricity Prices

Ekaterina Alekseeva, Luce Brotcorne, Sébastien Lepaul, Alain Montmeat

To meet unbalanced demand, an energy provider has to include costly generation technologies, which in turn results in high residential electricity prices. Our work is devoted to the application of a bilevel optimization, a challenging class of optimization problems, in electricity market. We propose an original demand-side management model, adapt a solution approach based on complementary slackness conditions, and provide the computational results on illustrative and real data. The goal is to optimize hourly electricity prices, taking into account consumers’ behaviour and minimizing energy generation costs. By choosing new pricing policy and shifting electricity consumption from peak to off-peaks hours, the consumers might decrease their electricity payments and eventually, decrease the energy generation costs.