The Effect of Price Elasticity on Demand Response Program Modeling in the Smart Power Grid (Case study of Tehran)

Various studies in electrical energy markets show that the active participation of the demand side in the electricity market, under the title of participation in demand response programs, leads to lower electricity prices, elimination of transmission line density, increasing of network security and improving the liquidity of the market. Accordingly, and in order to get the most out of these programs, it is first necessary to provide an economic model and use it to increase the willing of clients to participate. In this study, a simulation of a economic model of demand response has been performed based on price elasticity of demand and utility function. Since the demand of electricity depends on various elements of decision, such as the price of electricity, level of participation, the value of incentives and penalties specified in the demand response plans, it has been attempted to simulate them in an economical proposal. The proposed model has been evaluated using data related to the city of Tehran. And the results of the simulation have been presented in different scenarios. The results show that time-based rate programs are not sensitive to elasticity, and in any case, changing elasticity is not a determining factor in choosing the optimal policy for market decision makers, and only by changing elasticity, technical and economic indicators can be improved. But incentive-based programs and combined programs are sensitive to elasticity, and changing elasticity, in addition to improving technical and economic indicators, is a determining factor in choosing the optimal policy for market decision makers.