Capacity Controlled Demand Side Management: A Stochastic Pricing Analysis

TitleCapacity Controlled Demand Side Management: A Stochastic Pricing Analysis
Publication TypeJournal Article
Year of Publication2015
AuthorsKostas Margellos, Shmuel S Oren
JournalIEEE Transactions on Power Systems
Pagination1 - 12
Date Published03/2015
KeywordsCERTS, demand-side management, reliability and markets, RM12-001

We consider a novel paradigm for demand side management, assuming that an aggregator communicates with a household only at the meter, imposing a capacity constraint, i.e., a restriction on the total power consumption level within a given time frame. Consumers are then responsible to adjust the set-points of the individual household devices accordingly to meet the imposed constraint. We formulate the problem as a stochastic household energy management program, with stochasticity arising due to local photovoltaic generation. We show how a demand bidding curve for capacity increments can be constructed as a by-product of the developed problem and provide a rigorous pricing analysis that results in a probabilistic “shadow” price envelope. To evaluate the efficacy of the proposed approach, we compare it with an idealized real-time market price set-up and show how our analysis can provide guidelines to consumers when selecting a service contract for load curtailment.

Short TitleIEEE Trans. Power Syst.