A field study using an adaptive in-house pricing model for commercial and industrial customers in Korea

Min-Jeong Kim

Energy Policy, 2017, vol. 102, issue C, 189-198

Abstract: Demand response programs provide customers with economic incentives for load reductions at times of high market prices and system reliability constraints. One type of demand response programs, price-based program, induces customers to respond to changes in product rates. However, some large-scale customers find it difficult to change their electricity consumption patterns, even with rate changes, because their electricity demands are commercial and industrial. This study proposes an adaptive in-house pricing model for large-scale customers, particularly those with multiple business facilities, for self-regulating price-based program. The adaptive in-house pricing model charges higher rates to customers with lower load factors by employing a peak-to-off-peak usage ratio in order to reduce usage at times of high prices at each facility. This study analyzes the daily electricity consumption patterns of large-scale customers through a field trial of the proposed pricing model at a telecom company with 447 offices and worksites for one month. The results show that the pricing model corresponds to average reductions of 3.54–28.69% during peak-demand times for four different types of workplaces. However, reductions in electricity consumption during off-peak periods did not show a significant difference. The results of this study prove that this proposed pricing model can be successfully applied to large-scale operations.

Keywords: Demand response (DR) program; Price-based program; Adaptive in-house pricing model; Peak-to-off-peak usage ratio (POR); Critical-peak pricing (CPP); Commercial and industrial tariff (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:enepol:v:102:y:2017:i:c:p:189-198

DOI: 10.1016/j.enpol.2016.12.024

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