A robust optimization model for multiple electricity retailers based on electricity trading in the presence of demand response program

•Propose an electricity trading based cooperative mechanism.•Propose a customer composite cost function based customer model.•Propose a profit allocation method that enables each retailer to achieve profit growth.•Adopt a robust optimization approach to deal with wholesale market price uncertainty. This paper focuses on the short-term cooperation between the electricity retailers at distribution network level and proposes an electricity trading based cooperative mechanism to manage the cooperation between retailers. Under the cooperative mechanism, the objective of the retailers who are engaged in cooperation is to maximize their overall profit through appropriate electricity trading. The profit maximization problem for the retailers is formulated as a robust optimization model and solved via heuristic algorithms. The profit increment brought by electricity trading is allocated according to the proposed profit allocation method. The simulation results demonstrate that the proposed mechanism can effectively increase the overall profit of the retailers. Compared with the non-cooperative case, the cooperative case can increase the overall profit of 427.34 $ at best. Moreover, the results demonstrate that the number of the retailers involved in electricity trading has a positive impact on overall profit increment. The results also reveal that each retailer can achieve profit growth even under the most unfavorable conditions by adopting the profit allocation method.