A Market-Based Approach to Optimal Peak-Load Power Allocation

In this paper we propose a Peak Load Allocation Market framework designed to incentivize organizational units of Commercial and Industrial customers to reduce their peak demand. The market mechanism requires units' bids to indicate the value they associate with power services, and the power requirement for these services. The market resolution produces a service and payment allocation, i.e., determination of power services that are to be running and the payments that the units need to make or receive as part of exchange of peak demand bounds. The market mechanism is based on decision optimization, and guarantees the formally defined properties of Pareto optimality, Nash equilibrium and fairness.