Abstract
Previous pricing strategies including time-of-use price and dynamic price reflect system marginal cost and calculate consumers' bills according to the quantity of their electricity usage. Little effort is made to understand the impact of power volatility on total production costs. This paper thus proposes a novel pricing strategy reflecting the cost arising from power volatility. Firstly, the impact of volatility on the production cost is investigated to quantify volatility cost. Secondly, a novel pricing model is proposed to allocate the volatility cost to consumers and renewable energy generations (REGs). It can reveal the coupling relationship between an individual load/REG curve and the system load curve. Thirdly, under the proposed pricing strategy, customers/REGs help to flatten the system load curve and reduce the production cost in a decentralized manner, which is certificated theoretically based on the Haar wavelet transforms. Validation on residential level loads shows that the volatility and peak-to-valley difference of aggregated load curve is reduced by 34.07% and 19.81%, respectively. The problem of synchronous response among customers faced by hourly price strategies is addressed by the proposed strategy. A test on megawatt-level loads shows a 61.95% reduction in system load volatility and a 2.21% reduction in production cost. It also reduces the peak-to-valley difference by 6.52%.
Highlights
To utilize flexible resources in the demand side to reduce the production and operational cost, various pricing strategies and demand response (DR) programs have been proposed
To investigate the cost related to the volatility and allocate cost among those who cause the volatility, i.e. consumers and renewable energy generators (REGs), we propose a novel pricing strategy considering the cost of volatility
The proposed pricing strategy reflecting the cost of volatility can encourage consumers/renewable energy generations (REGs) to reduce the volatility of their load/output curve
Summary
To utilize flexible resources in the demand side to reduce the production and operational cost, various pricing strategies and demand response (DR) programs have been proposed. Consumers’ bills are computed according to the quantity of their electricity usage These strategies and DR programs seldom explore the impact of load/REG volatility on the production cost, failing to reflect the cost caused. A novel pricing strategy reflecting the cost of volatility is proposed to motivate consumers to contribute to flattening the system load curve and reducing the total production cost in a decentralized manner. To investigate the cost related to the volatility and allocate cost among those who cause the volatility, i.e. consumers and renewable energy generators (REGs), we propose a novel pricing strategy considering the cost of volatility. Ii) A novel apportionment factor for allocating the volatility cost among consumers/REGs is proposed It reveals the correlation between an individual load/power curve and the system net load curve.
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