Pricing Mechanisms versus Non-Pricing Mechanisms for Demand Side Management in Microgrids

TL;DR

This study compares pricing and non-pricing demand-side management strategies in microgrids, revealing that peak load reduction methods improve power stability, whereas price-based methods may increase peaks and losses.

Contribution

It provides a comparative analysis of load steering methods, highlighting the advantages of non-pricing peak load reduction strategies over market-price-based approaches.

Findings

Peak load reduction improves power flow stability.

Price-based strategies can increase peak loads and grid losses.

Non-pricing methods may be more effective for demand management.

Abstract

In this paper, we compare pricing and non-pricing mechanisms for implementing demand-side management (DSM) mechanisms in a neighborhood in Helsinki, Finland. We compare load steering based on peak load-reduction using the profile steering method, and load steering based on market price signals, in terms of peak loads, losses, and device profiles. We found that there are significant differences between the two methods; the peak-load reduction control strategies contribute to reducing peak power and improving power flow stability, while strategies primarily based on prices result in higher peaks and increased grid losses. Our results highlight the need to potentially move away from market-price-based DSM to DSM incentivization and control strategies that are based on peak load reductions and other system requirements.