Nodal price volatility reduction and reliability enhancement of restructured power systems considering demand–price elasticity

Abstract

With the development of restructured power systems, the conventional “same for all customers” electricity price is getting replaced by nodal prices. Electricity prices will fluctuate with time and nodes. In restructured power systems, electricity demands will interact mutually with prices. Customers may shift some of their electricity consumption from time slots of high electricity prices to those of low electricity prices if there is a commensurate price incentive. The demand side load shift will influence nodal prices in return. This interaction between demand and price can be depicted using demand–price elasticity. This paper proposes an evaluation technique incorporating the impact of the demand–price elasticity on nodal prices, system reliability and nodal reliabilities of restructured power systems. In this technique, demand and price correlations are represented using the demand–price elasticity matrix which consists of self/cross-elasticity coefficients. Nodal prices are determined using optimal power flow (OPF). The OPF and customer damage functions (CDFs) are combined in the proposed reliability evaluation technique to assess the reliability enhancement of restructured power systems considering demand–price elasticity. The IEEE reliability test system (RTS) is simulated to illustrate the developed techniques. The simulation results show that demand–price elasticity reduces the nodal price volatility and improves both the system reliability and nodal reliabilities of restructured power systems. Demand–price elasticity can therefore be utilized as a possible efficient tool to reduce price volatility and to enhance the reliability of restructured power systems.