Retail dynamic pricing strategy design considering the fluctuations in day-ahead market using integrated demand response.

• A DP model is proposed considering the fluctuation of the day-ahead price. • A two-step settlement mode is adopted for DP. • The optimal strategies of the community energy system under DP are presented. • DP has a good adaptability that can be beneficial to both the retailer and all residents. • DP can achieve the precise positioning of floating incentives among residents. The imbalance between fixed retail prices and fluctuating wholesale prices imposes enormous stresses on the profits of residential retailers. Dynamic pricing (DP) can be regarded as an effective measure for retailers to motivate demand resources and reduce their market risks. However, existing DP programs cannot be adapted to all residents, as these programs can bring financial risk to some groups, influencing their marketability to some extent. In this study, a DP model is proposed considering the fluctuation in the day-ahead market from the view of retailers. This model consists of two parts: (i) the fixed price, representing the existing price, and (ii) the floating price, which is a real-time reflection of the fluctuating day-ahead price. Then, a two-step settlement mode is adopted for this DP to ensure that there is no expenditure supplement of residents compared with the existing price. Further, in a community energy system, an integrated demand response strategy for profit maximization of the retailer is proposed to determine the optimal DP, in which the response behavior of residents is established using the demand price elasticity matrix on the whole. A detailed case study is conducted in three price scenarios to verify its applicability and effectiveness. The results show that DP strategies are beneficial for both the retailer and all residents. In addition, this approach can benefit residents who use more energy in valley hours but less energy during peak hours. [ABSTRACT FROM AUTHOR]