Dynamic Pricing Design for Demand Response Integration in Power Distribution Networks

This paper presents optimal pricing design for demand response (DR) integration in the distribution network. In particular, we study the energy scheduling problem for a load serving entity (LSE) that serves two types of loads, namely inflexible and flexible loads. Inflexible loads are charged under...

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Bibliographic Details
Published in:IEEE transactions on power systems 2016-09, Vol.31 (5), p.3457-3472
Main Authors: Nguyen, Duong Tung, Nguyen, Hieu Trung, Le, Long Bao
Format: Article
Language:English
Subjects:
Batteries
Bilevel programming
complementarity modeling
Customers
demand response
Design engineering
dynamic pricing
Economic models
Energy management
Load management
Load modeling
load serving entity
Mathematical models
Networks
Optimization
Power systems
Pricing
Pricing policies
Renewable energy sources
Tariffs
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Summary:This paper presents optimal pricing design for demand response (DR) integration in the distribution network. In particular, we study the energy scheduling problem for a load serving entity (LSE) that serves two types of loads, namely inflexible and flexible loads. Inflexible loads are charged under a regular pricing tariff while flexible loads enjoy a dynamic pricing tariff that ensures cost saving for them. Moreover, flexible loads are assumed to be aggregated by several DR aggregators. The interaction between the LSE and its customers is formulated as a bilevel optimization problem where the LSE is the leader and DR aggregators are the followers. The optimal solution of this problem corresponds to the optimal pricing tariff for flexible loads. The key advantage of the proposed model is that it can be readily implemented thanks to its compatibility with existing pricing structures in the retail market. Extensive numerical results show that the proposed approach provides a win-win solution for both the LSE and its customers.
ISSN:0885-8950
1558-0679
DOI:10.1109/TPWRS.2015.2510612