Dynamic pricing in electricity and natural gas distribution networks: An EPEC model

Sheng Chen, Guoqiang Sun, Zhinong Wei and Dan Wang

Energy, 2020, vol. 207, issue C

Abstract: Independent clearing of coupled retail electricity and natural gas markets generally results in a loss of market efficiency. This study investigates the problem of dynamic pricing in retail electricity and natural gas markets in the presence of network constraints by developing a two-leader multiple-follower bi-level model. Here, upper-level electricity and gas utility companies serve as leaders in the model, and determine their optimal dynamic retail prices in anticipation of the demand response (DR) provided by multiple lower-level integrated third-party DR providers or aggregators. Moreover, the model considers the dynamic gas prices provided by gas utility companies to electric utility companies for distributed gas-fired power units, which coordinates the operations of the separate utilities. The resulting model is recast as an equilibrium problem with equilibrium constraints (EPEC). Numerical results for a test system composed of an electric grid with distributed gas-fired power units, a gas distribution network, and multiple integrated DR aggregators indicate that the economic value of the proposed dynamic pricing scheme is up to 5.5% compared with existing regular pricing schemes.

Keywords: Electricity and natural gas distribution networks; Demand response (DR); Dynamic pricing; Retail market; Two-leader multiple-follower game; EPEC (search for similar items in EconPapers)
Date: 2020
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:207:y:2020:i:c:s0360544220312457

DOI: 10.1016/j.energy.2020.118138

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