Energy Delivery Transaction Pricing for flexible electrical loads

Although coordinating flexible electrical loads is known to have a multitude of benefits in terms of costs and reliability, designing efficient methods to practically induce the desired behavior, such as pricing mechanisms, poses a challenging problem. In this paper, we propose Energy Delivery Transaction Pricing (EDTP), a pricing scheme for coordinated energy delivery to delay tolerant demands that provides efficient incentives for load participation and facilitates demand side cost-comfort optimization. Instead of directly pricing electric power, we first define an energy delivery transaction as the process of delivering a certain amount of energy by a deadline and then propose a method to dynamically price the transactions. This approach enables us to reflect the value of flexibility as well as distribution network congestion level in the prices and hence to the users. We present our method using a flexible load scheduling problem we studied before and show that pricing each transaction as its incremental cost on the energy delivery schedule achieves our objectives. We compare the performance of EDTP in terms of the total cost of energy delivery, network level effects and user acceptance versus conventional consumption and optimal opportunistic response to real-time prices at different distribution network congestion levels. Our results show that EDTP exhibits strong performance advantage especially at and below moderate congestion levels and offers an advantageous option for most users while observing reliability of the distribution system and offering substantial amounts of reserves.