Deriving nonlinear models for incentive-based demand response programs

In the restructured electricity markets, the demand response programs (DRPs) are defined as participation of the retail consumers to observe and respond to changing prices over the time. Generally, DRPs are classified as incentive-based and time-based programs. By using the precise modeling of DRPs, the operator of the system can study the effect of price responsive loads in reliability and economic aspects of the system. In this paper, a nonlinear model of incentive-based DRP is developed based on the price elasticity of demand and benefit function of the customer. The behaviors of the derived models against elasticity change, incentive, penalty and potential of implementation are examined and degree of the reliance is determined. In order to investigate the performance of the proposed model, a numerical study is provided derived from a real world power system. The comparison results show that the power structure as non-linear model is the most conservative while the linear model is the most non-conservative.