Time-of-use pricing model based on power supply chain for user-side microgrid

Abstract The user-side microgrid offers great potential for improving energy efficiency. This flexible and small-scale power system is characterized by multiple types of clean power supplies. The power supply chain can reveal the supply-demand relationships in the series of steps from power generation to consumption. However, electricity prices tend to vary and can significantly affect the actual energy costs to end-users and other entities in the power supply chain. In this study, we propose an optimization model of time-of-use pricing for the user-side microgrid from the perspective of power supply chain management. The objective of this model is to minimize the total cost of the power supply chain and optimize the charging-discharging behaviors of end-users. First, to reduce the impact of demand amplification and variation, we investigated the bullwhip effect of the power supply chain. Then, we considered distributed energy storage as an important component of the user-side microgrid and how electric power companies can utilize pricing strategies to optimize the charging-discharging behaviors of end-users. We performed experiments based on two scenarios that assumed end-users with and without distributed energy storage devices. A comparative analysis of the modelling results indicates that optimal time-of-use pricing can support the charging-discharging behaviors of residential users and reduce the cost of the entire electric power supply chain. The optimized time-of-use price is important for stability, flexibility, and efficiency improvement in both the user-side microgrid and the entire power supply chain.

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