Abstract
One of the main challenges in the emerging smart grid is to jointly consider the demand and supply, which is also reflected in the wholesale market (supply side) and the retail market (demand side). When integrating the demand and supply side into one framework, the mechanism for determining the market clearing price has been changed. This is due to the demand variations in the demand side in response to the market clearing price and the change of generation costs in the supply side from the demand variation. In order to find the best balance between the supply and demand under the demand response management scheme, this paper proposes a new integrated supply and demand coordination mechanism for the electricity market and smart pricing methods for generator and retailers. Another important contribution of this paper is to develop an efficient algorithm to find the match equilibrium between the demand and supply sides in the new proposed mechanism. Experimental results demonstrate that the new mechanism can effectively handle unpredictable demand under dynamic retail pricing and support the ISO to dispatch the generation economically. It can also help in achieving the goals of dynamic pricing such as maximizing the profits for retailers.
Highlights
Since the early 21st century, the traditional electricity grid has been restructured and replaced by the Smart Grid (SG) in many countries [1,2]
To overcome the above limitations, in this paper we propose a new market integration mechanism to integrate and balance the demand and the supply to address the challenges of unpredicted demand due to dynamic pricing and demand response management programs
The work in this paper presents an integration mechanism with demand response which integrates the demand-side and supply-side as well as its market counterparts
Summary
Since the early 21st century, the traditional electricity grid has been restructured and replaced by the Smart Grid (SG) in many countries [1,2]. Same as other existing studies of this kind, Yu et al [21] mainly focuses on integrating the demand response into the whole energy system in order to induce the demand reduction in the retail side and cost minimization in the generation side, rather than balancing the demand and supply based on the current structure of the electricity market. To overcome the above limitations, in this paper we propose a new market integration mechanism to integrate and balance the demand and the supply to address the challenges of unpredicted demand due to dynamic pricing and demand response management programs. The proposed mechanism enables the ISO to realize the goals of dynamic pricing and demand response by utilizing smart meters such as effectively reducing CO2 emission, minimizing bills for customers and maximizing the profit for both retailers and generators.
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