Stochastic Based Demand Response Model

Incorporating the demand response program (DRP) is one of the best approaches to increase the efficiency level and improving the competitive electricity market performance. In a competitive market, consumers can response to the wholesale market price variations during different time scale. The DRP allows the independent system operator to decrease the price volatility in peak hours. Different references present various models for consumers’ response to the energy price but generally DRP can be categorized into two main groups which are: time based program and incentive based program. To determine the DR model, predicted values of energy price are largely uncertain, so it is desired to determine the optimal behavior of demand in a way that can be used to lessen the risk resulting from exposure to fluctuating price. In this paper a comprehensive model of DR is presented considering incentives and penalties set by policymaker and under prices uncertainty. The risk management method which is used in this paper is a conditional value at risk. In order to evaluate the performance of the proposed model, numerical studies are conducted on the Iranian interconnected network load profile on the annual peak day of the year 2012.