Optimal Demand Response Strategies to Mitigate Oligopolistic Behavior of Generation Companies Using a Multi-Objective Decision Analysis

In this paper, an agent-based model is proposed to improve the electricity market efficiency by using different demand response programs (DRPs). In the proposed model, the strategic self-scheduling of each market player in the electricity market and consequent market interactions are considered by using a game theoretic model powered by a security constrained unit commitment. The tariffs of price-based DRPs and the amount of incentive in the incentive-based DRPs are optimized. Furthermore, a market power index and the operation cost are used to evaluate the market efficiency by using a multi-objective decision-making approach. The results show that different types of DRPs differently affect the oligopolistic behavior of market players, and the potential of market power in power systems can be mitigated by employing the proposed model for DRP optimization. Numerical studies reveal that applying combinational DRPs is more efficient when the regulatory body considers both economic and market power targets.