Optimal Retail Pricing for Demand Response of HVAC Systems in Commercial Buildings Considering Distribution Network Voltages

Abstract

Retail pricing can be well deployed with support of distribution companies (DISCOs) to promote demand response (DR) programs using heating, ventilating, and airconditioning (HVAC) systems as thermal energy storage resources. This paper proposes a retail pricing strategy to assist a DISCO and end-users in achieving optimal price-based DR for HVAC systems while considering operational aspects of distribution network. The pricing strategy is developed using a bi-level decision model. In the upper level, the DISCO optimizes the retail price to maximize its profit. In the lower level, the end-users schedule HVAC loads to minimize their electricity bills. The nonlinear thermal response model of an experimental building room is integrated with a data-driven model of an HVAC system and incorporated into the pricing strategy using piece-wise linear approximation. The proposed strategy also employs time-of-use rates as retail price caps, leading to low-level price volatility. Case studies are presented for various ranges of bus voltage deviation and penetration levels of HVAC systems. The results demonstrate that the proposed strategy is effective for determining the optimal balancing point between the DISCO's profit and end-users' electricity bills while enabling the DISCO to reliably regulate the network voltages via the price-sensitive HVAC units.