Improved dynamic pricing framework for demand response considering transmission limits

In the demand response(DR) paradigm, dynamic pricing or real-time pricing (RTP) have been proposed as one of the widely accepted approaches to efficiently adjust and shift customers' consumption of energy away from peak periods, thus increasing system efficiency and stability. An appropriate price signal can provide an efficient economic incentive for electricity customers to consume their energy rationally. Various dynamic pricing schemes which aim to deliver proper price signal to electricity users have been widely investigated in the past decades. However, most of the analysis and results in existing literature related to dynamic pricing only valid when energy price is a linear function of the generation plant or extracted from the existed day ahead wholesale market. In practice, transmission and wheeling prices are also vital components of the electricity price since the wheeling utilities are accepted to receive appropriate revenue to cover the cost of transmission facilities and associated maintenance cost. In this paper, an innovative dynamic pricing framework is proposed for exploring the optimum price signal with the global consideration of wholesale market, benefits of power suppliers and customers' behaviours. The proposed framework is tested on IEEE 6 bus test system with a network operator and an electricity supplier serving multiple customers.