An Optimal Time-of-Use Electricity Pricing Scheme for Residential Loads in Bangladesh

Implementation of a compatible Time-of-Use (ToU) pricing scheme has manifested to be an emerging approach to mitigate peak demands and energy price in the developed countries. However, in the low to lower-middle income countries traditional ToU scheme implementation may put high risk of raising the energy price; which is why it is less commercial in this setting than in developed countries. These countries incessantly facing high peak demands which causes numerous amounts of load-shedding and superfluous electricity price due to reinforcement of poor network infrastructure to reduce the peak demand. The main aim of the paper is to propose an appropriate ToU pricing strategy to reduce the peak demand in residential sector that is applicable for countries with higher proportion of low-income consumers. In this study, Bangladesh has been deemed as an example of lower-to-middle income country. The main reason is that the residential consumers in Bangladesh are responsible for more than half of the total country's peak demand and paying energy price at inclining block usage rates which provide no financial incentive for shifting their loads to off-peak periods. The proposed ToU strategy is the innovative amalgamation of inclining blocks and traditional ToU pricing for different income levels incorporating load shifting capacity of end users. The analysis results illustrate significant reduction in peak demands with least consequences on consumer comfort and monthly electricity price.