Optimal pricing in smart grids boosts energy efficiency and user flexibility.
The article discusses using bilevel optimization to set optimal prices in smart power grids for demand response programs. This approach allows electricity suppliers to offer economic incentives to users for adjusting their power consumption. The researchers also introduce a new form of bilevel optimization where the lower level can choose a solution that is close to optimal, rather than strictly optimal. This method requires predicting how far from optimal the solution may be while ensuring it remains feasible.