A coordinative method for interruptible loads management in an electricity market

There are two compensation methods for interruptible loads (ILs), namely low price compensation before supply unavailability and high price compensation after supply unavailability. Low price compensation is independent of power supply unavailability, while the high compensation is performed only after actual power supply unavailability. However, the IL with low price (ILL) and the IL with high price compensation (ILH) have only been studied separately till now. Based on risk management, this paper analyzes the different economic properties of the two compensation methods and concludes that their coordination is beneficial to restrain market power and reduce the cost of reserve capacity. The authors propose the coordination models and optimization algorithms by taking the sum of the deterministic reduction of revenue resulting from ILL and the risk of compensating ILH as the objective function. Simulation results are presented to validate the effectiveness of the proposed method.