A bi-level operational reliability evaluation model for power systems considering economic dispatch and demand response

The increasing deregulation and integration of renewable energy are contributing to growing uncertainties in the power systems. The main uncertainties include the equilibrium game process among different stakeholders, the uncertainty of renewable generation, and random failures of components. It is critical to quantify their impact on the reliability of the power system accurately. This paper develops a bi-level operational reliability evaluation model of the deregulated power system with renewables (DPSR), considering the interaction between the economic dispatch scheme of generation and transmission operators (GTOs) and the benefits of load aggregators (LAs). In the upper level, the electricity consumption of end-users is incentivized by LA according to the dynamic locational marginal prices (LMP) and demand response (DR) capacity. In the lower level, an economic dispatch model is proposed to determine the risk-averse LMP. The developed model is solved using Karush-Kuhn-Tucker (KKT) conditions, strong duality theorem, and linear relaxation techniques. The results show that a win–win situation is achieved for both the GTO and LA, with a reduction in operational costs and an improvement in load profile.