Payment and Incentive Allocation Method in Demand Response Programs Based on Causer Pays Principle

Demand response (DR) plays a significant role for facilitating the integration of large-scale renewable energy sources (RES) by effectively unlocking the potential flexible capacities of the demand-side resources. However, the fund flows in existing DR mechanisms do not follow the “causer pays” principle (CPP), and hence fail to offer long-term and substantial DR incentive funds, hindering the widespread deployment of DR programs. To address these issues, this paper proposes a payment and incentive allocation method for the customer directrix load (CDL)-based DR mechanism. First, the concept of effective energy shift is proposed to quantify the marginal impact of each entity on the power systems unbalance, which clearly assess who are causers of the DR program and the pertinent payment. Furthermore, the DR incentive allocation method is proposed, where DR customers receive the incentive in proportion to the similarity index based on CDL. Meanwhile, the optimal decision model for incentive coefficient that maximizes the total social welfare is formulated. Finally, a case study is conducted and the results numerically verify the effectiveness of the proposed payment and incentive allocation method.