Hierarchical dispatch using two-stage optimisation for electricity markets in smart grid

This paper proposes a hierarchical dispatch method for the electricity markets consisting of wholesale markets and retail markets. In the wholesale markets, the generators and the retailers decide the generation and the purchase according to the market-clearing price. In the retail markets, the retailers set the retail price to adjust the electricity consumption of the consumers. Due to the two-way communications in smart grid, the retailers can decide the electricity purchase from the wholesale markets based on the information on electricity usage of consumers in the retail markets. We establish the hierarchical dispatch model for the wholesale markets and the retail markets and develop distributed algorithms to search for the optimal generation, purchase, and consumption. Numerical results show the balance between the supply and demand, the profits of the retailers, and the convergence of the distributed algorithms.