Time-of-use based electricity cost of manufacturing systems: Modeling and monotonicity analysis

Yong Wang and Lin Li

International Journal of Production Economics, 2014, vol. 156, issue C, 246-259

Abstract: Traditionally, manufacturing enterprises pay flat rates for each kiloWatt-hour (kWh) of electricity consumed. Newly available electric tariffs that charge both energy consumption (in kWh) and peak demand (in kiloWatts, i.e., kW) with varying time-of-use (TOU) rates have started to gain popularity. In this paper, the per-product electricity cost as a function of manufacturing system parameters and the TOU rates is modeled. The contributions of both electricity energy consumption and peak demand are combined to formulate the electricity cost of manufacturing systems with multiple machines and buffers. New knowledge of the effects of various modeling parameters on the electricity cost is acquired through monotonicity analysis. The formulated model is utilized to answer the following two questions facing manufacturers: With the availability of TOU rates in mind, is switching from the flat rates to the TOU rates economically sound? What changes can be made on electric use routines to take advantage of the TOU rates? The findings based on case studies show that with appropriate adjustment of production routines, a significant saving of up to 24.8% of the per-product electricity cost can be achieved by adopting the TOU rates.

Keywords: Time-of-use; Electricity cost; Energy efficiency; Peak demand response; Manufacturing system (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (10)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:proeco:v:156:y:2014:i:c:p:246-259

DOI: 10.1016/j.ijpe.2014.06.015

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