An Analysis of Profits and Savings in Generation Cost for Different Dynamic Pricing Schemes

Dynamic pricing in electrical systems is a promising tool that could be used in future power grids to modify the overall shape of the daily demand. This can have enormous benefits for utility companies, which can use different demand shaping techniques to modify the shape of the demand in ways that can reduce the overall cost of generation or increase their revenue. By appropriately introducing real-time pricing schemes, utility companies can effectively reshape the daily load profile, to reduce the peak load or fill the early morning demand valleys. In this paper, two different dynamic pricing schemes are evaluated in terms of the way revenue is procured. While in some cases, revenue is increased by the simple reduction in generation cost; in other cases, the higher price premiums yield an increased revenue to the utility companies. Results show that different schemes, as well as different customer flexibility and awareness levels, can significantly contribute to the amount and type of revenue utility companies can procure.