The Model and Methodology of Avoidable Costs in Demand Side Management

Power Demand Side Management (DSM) has now become the main means of energy conservation and load regulation, whose main income is from the power investment costs which is called avoidable costs. The processes of evaluating the benefits of DSM projects are also the processes of evaluating the avoidable costs of power system. This paper establishes a comprehensive unit avoidable cost model of power system in which the transmission and distribution unit avoidable cost takes the allocation factor into consideration to reflect the different value of the load reduced in different time. This paper also establishes the avoidable costs model of the generation company, the grid corporation and society, and uses the case to analysis the profit of the generation company, the grid corporation and society in different DSM investment projects.