Economic welfare gains from demand response and real-time pricing for industrial processes
Zahedi, Cameron Saeed
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Sustainable electricity supply has come to the forefront of current affairs in the U.S. The power grid of the future requires significant system-level upgrades to an outdated infrastructure. A combination of new technology and new energy management strategies will be necessary. An important topic of discussion is Demand Response (DR), and usually coupled with it is Real-Time Electricity Pricing (RTP). The former refers to electricity users' reducing their demand, often receiving some kind of benefit in exchange, which theoretically helps grid reliability during system stress and levels out market prices. The latter refers to the grid's pricing electricity based on current generation, which theoretically allows for more accurate price effects. Through analyzing a model of industrial load-shifting as a demand response method employed by a customer with day-ahead real-time pricing, this paper demonstrates the economic welfare benefits that can accrue from real-time pricing and demand response in modern power systems.