Price-based load coordination revisited: augmenting open-loop coordination approaches

• Main Authors: Christoph M. Flath, Sebastian Gottwalt
• Format: Article
• Language: English
• Published: Springer 2016-02-01
• Series: Business Research
• Subjects: Smart grid; Electricity pricing; Demand side management; Electric vehicles; Renewable energy sources
• Online Access: http://link.springer.com/article/10.1007/s40685-016-0033-8

Abstract The activation of flexible loads through demand side management offers opportunities for more efficient power systems operations. Price-based incentive are a straight-forward form for decentral coordination of these flexible loads. However, their applicability has recently been seen more pessimistic as they may induce new load peaks due to herding effects. We revisit these results by characterizing desynchronized posted pricing approaches. Illustrating highly flexible load by means of electric vehicle charging, we show that these desynchronized rate can mitigate the occurrence of extreme load spikes, improve the utilization of renewable generation and in summary create significant system cost savings. Our results show that simple open-loop pricing can almost match the efficiency of closed-loop adaptive pricing in settings with limited system flexibility. We find that the more renewable generation and flexible load are present in the system, the better more complex pricing schemes fare compared to simple ones. This insight may guide regulators and utilities in establishing more effective pricing schemes in retail electricity markets.