Using a Bi-Level Optimization Model for Assessing the Impact of Demand Forecast Uncertainty on the Maximum Profit of Power Distribution Companies Owning Energy Storage Systems

Abstract

This paper proposes a bi-level optimization model to maximize the net revenue of a power distribution company owning energy storage systems. Furthermore, the proposed model also takes into account the uncertainty of load forecast based on a set of multiple scenarios in order to assess its impact on the maximum net revenue of the power distribution company. This bi-level optimization model is transformed into the single-level mixed-integer linear programming model by using the Karush-Kuhn-Tucker optimality conditions and strong duality theorem. This single-level optimization formulation can be effectively solved by using standard commercial solvers such as CPLEX. The proposed model and the effects of the load forecast uncertainty on the net revenue of the power distribution company are validated and analyzed on an IEEE 24-bus meshed transmission grid.