Optimal Design of Retailer-Prosumer Electricity Tariffs Using Bilevel Optimization

Veronika Grimm, Galina Orlinskaya, Lars Schewe, Martin Schmidt, Gregor Zöttl

Research output: Contribution to journalArticlepeer-review

Abstract / Description of output

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 thespecific characteristics of TOU, CPP, and RTP, so that the flexible tariffs areat least as profitable for the prosumer as the FP tariff. We propose bilevelmodels to determine the optimal interplay between the retailer’s tariff designand the prosumer’s decisions on using the storage, on consumption, and onelectricity purchases from as well as electricity sales to the grid. The single-level reformulations of the considered bilevel models are computationally highlychallenging optimization problems since they combine bilinearities and mixed-integer aspects for modeling certain tariff structures. Based on a computationalstudy 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 yieldmild additional retailer profits and, due to the multiplicity of optimal plans onthe part of the prosumer, imply uncertain revenues for the retaile
Original languageEnglish
Number of pages32
Early online date29 Aug 2020
Publication statusE-pub ahead of print - 29 Aug 2020


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