A model for setting and validating sale prices of an electricity trader by means of load shifts

Purpose – The purpose of this paper is to tackle the problem an electricity trader faces when trying to set and validate his sale prices. Design/methodology/approach – The solution approach consists in offering adequate incentives to the customers in order to encourage them to shift their consumptions to more favorable time periods; this is achieved by suitable price modifications. The problem of determining the most sensible prices to offer yields to a quadratic programing model which can be efficiently solved to optimality. Findings – This paper analyses an opportunity that traders can exploit for increasing their profit margins and, in general, for setting and validating their electricity sale prices. The real case of an Italian trader has been analysed and the numerical results show that the obtained sale price modifications may produce savings, both for the trader and for his customers. Originality/value – This research provides insights about the problem an electricity trader faces when setting his sale prices; it mainly focuses on the Italian market although the developed mathematical model is sufficiently general to be adopted in different scenarios.