Optimal pricing in time of use demand response by integrating with dynamic economic dispatch problem

Abstract

DED (Dynamic economic dispatch) problem schedules generation units during the whole dispatch period in order to minimize the fuel costs. On the other hand DRPs (Demand Response Programs) focus on increasing customers' benefit and improving network reliability. If these two problems are optimally integrated considering their interactions at each side, they will be implemented more effectively. One of the main concerns in the TOU (Time of Use) DRP is the optimal pricing during different periods. In this paper, TOU which focuses on the demand side has been intelligently integrated with the DED problem which focuses on the supply side. In the combined problem namely DEDTOU, a new procedure for the optimal pricing will be presented so that the fuel costs in the DED problem are minimized and the optimal prices during different periods i.e. valley, off-peak, and peak periods in TOU are determined simultaneously. By the way, not only the network reliability and customers' benefit are increased but also fuel costs are decreased and generation units are optimally scheduled. Actually, DEDTOU is a win-win game both for the demand and supply sides. DEDTOU is applied on a ten units test system and results indicate the effectiveness of the proposed model.