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Energies 2015, 8(10), 11363-11379; doi:10.3390/en81011363

Designing a Profit-Maximizing Critical Peak Pricing Scheme Considering the Payback Phenomenon

1
Department of Electrical Engineering and Computer Science, Seoul National University, Daehak-dong, Gwanak-gu, Seoul 151-742, Korea
2
Center for Advanced Power & Environmental Technology (APET), the University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo 113-8656, Japan
*
Author to whom correspondence should be addressed.
Academic Editor: Ying-Yi Hong
Received: 15 July 2015 / Revised: 4 October 2015 / Accepted: 8 October 2015 / Published: 13 October 2015
(This article belongs to the Special Issue Electric Power Systems Research)
View Full-Text   |   Download PDF [443 KB, uploaded 13 October 2015]   |  

Abstract

Critical peak pricing (CPP) is a demand response program that can be used to maximize profits for a load serving entity in a deregulated market environment. Like other such programs, however, CPP is not free from the payback phenomenon: a rise in consumption after a critical event. This payback has a negative effect on profits and thus must be appropriately considered when designing a CPP scheme. However, few studies have examined CPP scheme design considering payback. This study thus characterizes payback using three parameters (duration, amount, and pattern) and examines payback effects on the optimal schedule of critical events and on the optimal peak rate for two specific payback patterns. This analysis is verified through numerical simulations. The results demonstrate the need to properly consider payback parameters when designing a profit-maximizing CPP scheme. View Full-Text
Keywords: critical peak pricing; critical event scheduling; optimal peak rate; payback phenomenon; load recovery; load serving entity critical peak pricing; critical event scheduling; optimal peak rate; payback phenomenon; load recovery; load serving entity
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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MDPI and ACS Style

Park, S.C.; Jin, Y.G.; Yoon, Y.T. Designing a Profit-Maximizing Critical Peak Pricing Scheme Considering the Payback Phenomenon. Energies 2015, 8, 11363-11379.

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