Indirect Load Control for Energy Storage Systems Using Incentive Pricing under Time-of-Use Tariff

Mu-Gu Jeong, Seung-Il Moon and Pyeong-Ik Hwang
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Mu-Gu Jeong: Department of Electrical and Computer Engineering, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Korea
Seung-Il Moon: Department of Electrical and Computer Engineering, Seoul National University, 1 Gwanak-ro, Gwanak-gu, Seoul 08826, Korea
Pyeong-Ik Hwang: Korea Electric Power Research Institute (KEPRI), Korea Electric Power Company (KEPCO), 105 Munji-Ro, Yuseong-gu, Daejeon 34056, Korea

Energies, 2016, vol. 9, issue 7, 1-20

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.

Keywords: bilevel programming; demand-side management; energy storage system (ESS); indirect load control (ILC) (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (6)

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