Examination of optimum benefits of customer and LSE by incentive and dynamic price-based demand response

ABSTRACT

The balancing approach of electricity generation and consumption is an essential part of a reliable power system. The mismatch between supply and demand may also cause fluctuation in the power system. This study proposes an incentive and penalty-based demand response (I&P-DR) program for improving the profitability of both LSE and customers. First, we use a parameter that weighs the financial benefits of LSE and customers and provides considerable economic benefits to both sides. Second, an incentive and penalty (I&P) price scheme have been employed to recompense and penalize customers and reduce the electricity demand at peak hours. Finally, the study analyzes the importance of (I&P-DR) and its impact on customers’ sensitivity during peak intervals. Simulation results showed that the flexibility to consumption can be brought through the application of the proposed (I&P-DR) program and also provide the financial benefits to both, customers and LSEs.

KEYWORDS:

• Demand response
• incentive-based DR
• penalty-based DR
• profit maximization
• load reduction
• price volatility
• customer sensitivity

Acknowledgments

The National Natural Science Foundation of China (No. 11171221), the Natural, Science Foundation of Shanghai (14ZR1429200), and the Innovation Program of Shanghai Municipal Education Commission (15ZZ074) supported this work.

Correction Statement

This article has been republished with minor changes. These changes do not impact the academic content of the article.