Novel model for defining electricity tariffs using residential load profile characterisation

Abstract

In recent years, great attention towards enabling future smart grid functionalities in distribution networks creates significant changes in electricity load profiles. These changes require a new advanced paradigm in electricity pricing and tariffs definition aiming to increase the potential of responsiveness demand. This paper aims to propose a new model for designing residential electricity tariffs using their load profile clustering and characterization, taking into account social, technical and educational factors alongside the financial incentives. The methodology is based on estimation of the potential of demand responsiveness to dynamic pricing over time for different cluster of households with similar electricity consumption patterns. In this regard, different time of use pricing bands has been considered and compared with fixed price tariffs. Moreover, a baseline demand for each cluster of households has been determined based on the elasticity of demand to different static tariffs. The results show that the proposed model can provide distribution network operators (DNOs) and suppliers with a basic and general outline of defining more effective dynamic pricing schemes that reflect intermittent nature of residential demand.