Distribution LMP-based demand management in industrial park via a Bi-level programming approach

To enhance industrial park's economic gains and effectively allocate its electricity bill among industrial users with combined heat and power (CHP) units and photovoltaic (PV) panels, this paper proposes a distribution locational marginal price (DLMP)-based bi-level demand management approach. The upper level optimizes dispatching decisions of industrial users with the objective of minimizing their energy bills, and the lower level is a DLMP-based market clearing problem to minimize the two-part tariff cost of the industrial park operator. In order to solve the proposed bi-level model efficiently, it is first equivalently converted into a single-level mathematical programming with equilibrium constraints (MPEC), and then reformulated as a mixed-integer second-order conic programming (MISOCP) model by linearizing bilinear terms. Numerical results demonstrate the effectiveness of our proposed bi-level method in lowering industrial park's electricity bill and achieving effective allocation among users.