Abstract
Indirect load control (ILC) is a method by which the customer determines load reduction of electricity by using a price signal. One of the ILCs is a time-of-use (TOU) tariff, which is the most commonly used time-varying retail pricing. Under the TOU tariff, the customer can reduce the energy cost through an energy storage system (ESS). However, because this tariff is fixed for several months, the ESS operation does not truly reflect the wholesale market price, which could widely fluctuate. To overcome this limitation, this paper proposes an incentive pricing method in which the load-serving entity (LSE) gives the incentive pricing signal to the customers with ESSs. Because the ESS charging schedule is determined by the customer through ILC, a bilevel optimization problem that includes the customer optimization problem is utilized to determine the incentive pricing signal. Further, the bilevel optimization problem is reformulated into a one-level problem to be solved by an interior point method. In the proposed incentive scheme: (1) the social welfare increases and (2) the increased social welfare can be equitably divided between the LSE and the customer; and (3) the proposed incentive scheme leads the customer to voluntarily follow the pricing signal.
Highlights
In order to maintain the balance between electricity demand and supply, it was inevitable to install new infrastructure, such as generators, transmission lines, and distribution lines.such an approach may be constrained by space, finance, and the physical environment.In addition, for peak demand, the production cost is high, increasing the energy cost under this approach
The effect of the proposed incentive scheme is verified by comparing the profits of the customer and the load-serving entity (LSE) from the proposed incentive method with those from the TOU rates
In order to maximize the energy storage system (ESS) utilization, indirect load control (ILC) using the incentive price for the ESS operation is proposed under the TOU tariff
Summary
In order to maintain the balance between electricity demand and supply, it was inevitable to install new infrastructure, such as generators, transmission lines, and distribution lines.such an approach may be constrained by space, finance, and the physical environment.In addition, for peak demand, the production cost is high, increasing the energy cost under this approach. In order to maintain the balance between electricity demand and supply, it was inevitable to install new infrastructure, such as generators, transmission lines, and distribution lines. Such an approach may be constrained by space, finance, and the physical environment. For peak demand, the production cost is high, increasing the energy cost under this approach. Through DSM, utilities and load-serving entities (LSEs) can reduce their operating costs and defer the upgrade of their network and improve system reliabilities [1,2,3]. By participating in the DSM, the customers can reduce their electricity bills or make the incentives
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