Designing Menus for Multilevel Demand Subscription

Abstract

Priority service and its generalization, multilevel demand subscription, have been proposed in the literature as alternatives to real-time pricing in residential demand response aggregation. This paper proposes a modeling approach for designing multilevel demand subscription menus that are comparable to priority service pricing menus. The menus are designed as the equilibrium solution to a Stackelberg game, which is modeled as a bilevel optimization problem involving a vertically integrated utility and consumers. The problem is reformulated and solved as a mixed integer linear program. The menus are compared in a realistic model of the Belgian power market.