A Bilevel QP-PLP Approach to Demand Response Modulation between Consumers and a Single Electricity Seller

During the peak hours, electricity becomes extremely expensive to produce and deliver
and this causes a negative effect both to the suppliers and consumers. From the producer
point-of-view, real-time pricing may be implemented to incentivize the consumers to shift
their load usage to off-peak hours. That is, to adjust for a lower price during off-peak hours
and for a higher price during the on-peak hours. On the other hand, the consumers would
then respond optimally to the given strategic prices by means of flexible load scheduling and
incorporation of smart energy management systems. We present in this paper an intermediate
model that maximizes the profit of the supplier while maintaining the low expenses of the
consumers by using a bilevel program of the form QP-PLP, where the upper-level problem
is quadratic and the lower-level problem is a parametric linear program.