Coupon-Based Demand Response for Consumers Facing Flat-Rate Retail Pricing

Abstract

Even though smart meters have been widely used in power systems around the world, many consumers are still finding it hard to participate in demand response (DR) due to flat-rate retail pricing policy. To address this issue, this paper proposes a coupon-based demand response (CDR) scheme to achieve equivalent dynamic retail prices to inspire consumers' inherent elasticity. First, a security-constrained unit commitment optimization model is developed in the day-ahead market to obtain coupon rewards, which are then broadcast to consumers to motivate them to reschedule their power consumption behaviors. To evaluate the adjustment value of consumers' power consumption, a collective utility function is proposed to formulate the relationship between power quantity and coupon rewards. On this basis, the security-constrained economic dispatch model is developed in the intra-day market to reschedule generating units' output power according to real-time load demands and fluctuating renewable energies. After the operation interval, a settlement method is developed to quantify consumers' electricity fees and coupon benefits on a monthly basis. The proposed CDR scheme avoids real-time iterative bidding process and effectively decreases the difficulty of massive, small consumers participating in DR. The proposed CDR is implemented in a realistic DR project in China to verify consumers' energy cost and renewables' curtailment can both be decreased.