A linearized multi-objective Bi-level approach for operation of smart distribution systems encompassing demand response

In smart grid parlance, the demand response (DR) creates an opportunity to enhance techno-economic metrics of distribution system while concurrently benefitting the customers. These advantages can be obtained only when DR is incorporated and managed optimally in coordination with other smart technologies. In this paper, a multi-objective bi-level optimization model is proposed to study the coordination of distribution system operator (DSO) and DR aggregators. The DSO at the upper level aims to determine the pricing policy for DR participants, dispatch of distributed generations and battery storage to maximize both economic and technical objectives. The DR aggregators at the lower level respond to the price signals by scheduling flexible loads to maximize profit. The DR aggregators are acting on the behalf of customers. The multi-objective problem at the upper level is solved using ε-constraint method and thereafter, best compromising solution is decided through fuzzy criteria. The resulting bi-level model is converted into a single level model using Karush-Kuhn-Tucker conditions and strong duality theorem. Moreover, a linearized power flow is developed to remove the complexity of non-linear AC load flow equations. The effectiveness and efficacy of the proposed model is assessed on 33-bus distribution system under different scenarios.