Optimal implementation strategies for critical peak pricing

Abstract

Critical peak pricing (CPP) is an important means of demand response in electricity markets. As a flexible tariff mechanism, making rational CPP implementation strategies and selecting suitable critical days are crucial to its successful implementation. Based on an analysis of tariff scheme and implementation process of CPP, customer response to CPP is described by a price elasticity matrix of demand, and electricity prices are forecasted by a hybrid electricity price model. Furthermore, a CPP decision model which considers the interests of both customers and load serving entity (LSE) is introduced and then solved by 0-1 integer programming. Numerical results are finally used to prove the effectiveness of the proposed model, which is beneficial to saving customer electricity bills, reducing electricity purchase cost of LSE, hedging against electricity purchasing risk for LSE in wholesale market, and realizing multi-party win.