Optimal design of retailer-prosumer electricity tariffs using bilevel optimization

Grimm V, Orlinskaya G, Schewe L, Schmidt M, Zöttl G (2020)

Publication Type: Journal article

Publication year: 2020

Journal

Omega-International Journal of Management Science Elsevier

Article Number: 102327

DOI: 10.1016/j.omega.2020.102327

Abstract

We compare various flexible tariffs that have been proposed to cost-effectively govern a prosumer's electricity management—in particular time-of-use (TOU), critical-peak-pricing (CPP), and a real-time-pricing tariff (RTP). As the outside option, we consider a fixed-price tariff (FP) that restricts the specific characteristics of TOU, CPP, and RTP, so that the flexible tariffs are at least as profitable for the prosumer as the FP tariff. We propose bilevel models to determine the optimal interplay between the retailer's tariff design and the prosumer's decisions on using the storage, on consumption, and on electricity purchases from as well as electricity sales to the grid. The single-level reformulations of the considered bilevel models are computationally highly challenging optimization problems since they combine bilinearities and mixed-integer aspects for modeling certain tariff structures. Based on a computational study using real-world data, we find that RTP increases retailer profits, however, leads to the largest price volatility for the prosumer. TOU and CPP only yield mild additional retailer profits and, due to the multiplicity of optimal plans on the part of the prosumer, imply uncertain revenues for the retailer.

Authors with CRIS profile

Veronika Grimm Lehrstuhl für Volkswirtschaftslehre, insbesondere Wirtschaftstheorie Galina Orlinskaya Juniorprofessur für Optimierung von Energiesystemen Karl Gregor Zöttl Professur für Volkswirtschaftslehre

Involved external institutions

University of Edinburgh GB United Kingdom (GB) Universität Trier DE Germany (DE)

How to cite

APA:

Grimm, V., Orlinskaya, G., Schewe, L., Schmidt, M., & Zöttl, G. (2020). Optimal design of retailer-prosumer electricity tariffs using bilevel optimization. Omega-International Journal of Management Science. https://doi.org/10.1016/j.omega.2020.102327

MLA:

Grimm, Veronika, et al. "Optimal design of retailer-prosumer electricity tariffs using bilevel optimization." Omega-International Journal of Management Science (2020).

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