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

Author

Listed:
  • 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)

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.

Suggested Citation

  • Mu-Gu Jeong & Seung-Il Moon & Pyeong-Ik Hwang, 2016. "Indirect Load Control for Energy Storage Systems Using Incentive Pricing under Time-of-Use Tariff," Energies, MDPI, vol. 9(7), pages 1-20, July.
    • Handle: RePEc:gam:jeners:v:9:y:2016:i:7:p:558-:d:74217
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    References listed on IDEAS

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    Cited by:

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    2. Ibtihal Abdelmotteleb & Tomás Gómez & Javier Reneses, 2017. "Evaluation Methodology for Tariff Design under Escalating Penetrations of Distributed Energy Resources," Energies, MDPI, vol. 10(6), pages 1-16, June.
    3. Jangkyum Kim & Yohwan Choi & Seunghyoung Ryu & Hongseok Kim, 2017. "Robust Operation of Energy Storage System with Uncertain Load Profiles," Energies, MDPI, vol. 10(4), pages 1-15, March.
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    6. Kai Ma & Congshan Wang & Jie Yang & Qiuxia Yang & Yazhou Yuan, 2017. "Economic Dispatch with Demand Response in Smart Grid: Bargaining Model and Solutions," Energies, MDPI, vol. 10(8), pages 1-17, August.

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