Demand Response Programs and their Role

in System Security and Market Efficiency

by

Haytham Raafat Gamal Ibrahim

A project
presented to the University of Waterloo
in fulfillment of the
project requirement of Power Systems Operation course

in
Electrical and Computer Engineering Department

Waterloo, Ontario, Canada, 2017

© Haytham Raafat Gamal Ibrahim 2017

 Abstract

In the context of smart grids, demand response has been introduced as a means of lowering the peak
demand of power system and hence, reducing the overall cost, deferring the need for urgent system
upgrades and improving system reliability. This is done by promoting the interaction of the customers
through multiple DR programs in which customers modify their behavior and electricity purchasing
patterns based on some information received from the utilities. Programs usually include incentives
paid to participating customers based on their response.

This project addresses this subject by firstly defining what the demand response is. The different
classifications of DR programs are presented and illustrated. The influence (in terms of benefits and
costs) of the application of DR programs on different system aspects is discussed. Then, the challenges
that face the implementation of these programs are explained. Some DR programs applied in North
America are then summarized.

Finally, an optimal power flow (OPF) model solution for IEEE 14-bus system is developed using
GAMS optimization environment. The solution is obtained in two cases: the base case with no demand
response taken into consideration and the DR case, in which responsive elastic demand is considered
to show the effect of demand response on the solution of the OPF model and the obtained locational
marginal costs in both cases.

ii
 Table of Contents
Abstract .................................................................................................................................................. ii 
Table of Contents .................................................................................................................................. iii 
List of Figures ........................................................................................................................................ v 
List of Tables ......................................................................................................................................... vi 
1. Introduction ........................................................................................................................................ 1 
2. What is demand response? ................................................................................................................. 2 
2.1 Definition...................................................................................................................................... 2 
2.2 Programs classification ................................................................................................................. 4 
3. DR impact........................................................................................................................................... 6 
3.1 Benefits ......................................................................................................................................... 7 
3.2 Costs ............................................................................................................................................. 9 
4. Challenges facing DR programs ....................................................................................................... 10 
4.1 Consumer’s challenges ............................................................................................................... 11 
4.1.1 Consumer’s knowledge ....................................................................................................... 11 
4.1.2 Availability of technology ................................................................................................... 11 
4.1.3 Information feeds................................................................................................................. 11 
4.1.4 Response fatigue.................................................................................................................. 12 
4.1.5 Technology cost and financing ............................................................................................ 12 
4.1.6 Inconvenient potential savings ............................................................................................ 12 
4.1.7 Satisfying behavior in switching patterns ............................................................................ 13 
4.2 Producer’s challenges ................................................................................................................. 13 
4.2.1 Investment recovery ............................................................................................................ 13 
4.2.2 Promotional responsibility................................................................................................... 14 
4.2.3 Managerial incentives .......................................................................................................... 14 
4.3 Structural challenges .................................................................................................................. 14 
4.3.1 Program structure (rates, technology, ...etc.) ....................................................................... 14 
4.3.2 Regulatory (restructuring) process and policy support........................................................ 15 
5. Demand response programs of different ISOs/RTOs ....................................................................... 15 
5.1 ISO New England (ISO-NE) ...................................................................................................... 15 
5.2 California statewide CPP program ............................................................................................. 15 
5.3 New York Independent System Operator (NYISO) ................................................................... 16 
5.4 PJM interconnection ................................................................................................................... 16 
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 5.5 DR in Ontario ............................................................................................................................. 16 
6. Simulation ........................................................................................................................................ 17 
6.1 Optimal power flow formulation ............................................................................................... 17 
6.2 Results of the typical model ....................................................................................................... 19 
6.2.1 Base case ............................................................................................................................. 19 
6.2.2 DR case ............................................................................................................................... 20 
6.3 Results of the modified model ................................................................................................... 22 
6.3.1 Base case ............................................................................................................................. 22 
6.3.2 DR case ............................................................................................................................... 23 
7. Conclusion ....................................................................................................................................... 25 
REFERENCES .................................................................................................................................... 26 
APPENDIX-A...................................................................................................................................... 27 
APPENDIX-B ...................................................................................................................................... 31 

iv
 List of Figures
Figure 1 – DR programs classification ................................................................................................... 4 
Figure 2 – DR benefits classification ..................................................................................................... 8 
Figure 3 – a simplified DR impact on electricity prices ......................................................................... 9 
Figure 4 –DR costs classifications ....................................................................................................... 10 
Figure 5 –Locational marginal costs at each bus in both cases (typical model)................................... 22 
Figure 6 –Locational marginal costs at each bus in both cases (modified model) ............................... 25 
Figure 7 –IEEE 14-bus system ............................................................................................................. 27 

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 List of Tables
Table 1 – Framework for establishing demand response value ............................................................. 2 
Table 2 – Base case locational active power marginal costs (typical model) ...................................... 19 
Table 3 – Optimum solution locational load scaling factors of the DR case (typical model).............. 20 
Table 4 – DR case locational active power marginal costs (typical model) ........................................ 21 
Table 5 – Base case locational active power marginal costs (modified model) .................................. 23 
Table 6 – Optimum solution locational load scaling factors of the DR case (modified model) .......... 24 
Table 7 – DR case locational active power marginal costs (modified model) ..................................... 24 
Table 8 – Lines and transformers data ................................................................................................. 28 
Table 9 – Active and reactive power load data .................................................................................... 29 
Table 10 – Generators capacities and cost coefficients (typical model) .............................................. 29 
Table 11 – Generators capacities and cost coefficients (modified model) .......................................... 30 

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1. Introduction

As the evolution of the smart grids goes on with numerous key objectives, energy-efficient power grid
is considered one of the main objectives that led to the transition to the paradigm of smart grids and the
interest it continues to receive from researchers and system operators. One of the main crucial aspects
of energy efficiency is the balance between demand and supply at all times considering the substantial
costs of installing energy storage means in the system. Both the supply and the demand, however,
change continuously and in some cases, their changes cannot be predicted because of some incidents
such as the forced outage of a generating unit or a transmission line. Moreover, at peak periods of
demand, expensive or less-efficient generating units have to be utilized to meet that demand and that
results in large fluctuations in electricity price in the wholesale markets. At such moments, even a small
reduction in demand can lead to a considerable reduction in system marginal cost.

Taking advantage of the modern advancements in the technologies of the smart grids like two-way
digital communications, the concept of demand side management (DSM) emerged which promotes
customers’ interaction and response by using the load as an additional degree of freedom.

DSM takes several forms as it comprises all the measures applied from the load side of an energy
system that target the alteration of consumers’ demand profile, in time and/or shape, to match it with
the supply and that may include replacing inefficient loads with better ones up to installing an advanced
energy management system. DSM can be categorized into the following in terms of timing and impact
of the applied measure on the customer’s process [1]:

 Energy Efficiency (EE).

 Time of Use (TOU).

 Demand Response (DR).

 Spinning Reserves (SR).

Energy efficiency (EE) include replacement of devices with more-efficient ones or improving
physical properties of the system such as mounting additional insulation to a building to reduce the heat
transfer to the surroundings and hence decrease the heat, ventilation and air-conditioning (HVAC)
system consumption. Customers are encouraged to arrange their processes at times other than the peak
times in the Time of Use Tariff (TOU) measure in which consumers are penalized for consuming power
at certain periods.

1
 Demand response (DR) is the subject of this project and will be discussed in details. While in the
spinning reserves measure, loads act as a virtual negative spinning reserve by correlating their power
consumption to the grid state by, for instance, reducing their consumption when the frequency drops
(represented by system damping). Furthermore, DSM can also be employed to facilitate the integration
of distributed generation (DG) in the system and that results in significant savings in energy generation
and transmission.

2. What is demand response?

2.1 Definition
Demand response (DR) can be defined as “the changes in electric usage by end-use customers from
their normal consumption patterns in response to changes in the price of electricity over time. Further,
DR can be also defined as the incentive payments designed to induce lower electricity use at times of
high wholesale market prices or when system reliability is jeopardized” [2]. It embraces all possible
modifications to end users’ electricity consumption patterns intended to alter the timing, level of
instantaneous demand, or the total electricity consumption.

Customer’s Customer’s Purpose of Advance Time

Valuing DR
perspective service impact DR notice perspective
Total loss of System Full outage
5 Full outage None 0-6 hrs/year
service protection cost
Involuntary Expected
Grid or system Seconds
4 end-use Loss of end-use value of partial 2-10 hrs/year
protection or less
curtailment outage cost
Expected
Voluntary
Some comfort Reliability and value of partial Seconds
3 partial end-use 20-40 hrs/year
impact economics outage cost to hours
curtailment
and kW
Shifting or No noticeable Hours to
2 Economics kW and kWh 40-100 hrs/year
rescheduling impact days
1 Basic service None None kWh Annual Years

Table 1 – Framework for establishing demand response value [5]

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 Table-1 shows five specific actions from the customer’s perspective that represent the range of
customer response along with their impact on the service and the purpose of the demand response action
in each level. Notice period is also shown for each. The column titled ‘‘Valuing DR” highlights how
each level of response reflects a different evaluation component [5].

Generally, the customers can take any of the following three actions to respond to high electricity
prices at peak periods [2]. Firstly, they have the option to reduce their electrical energy consumption
during peak periods and keep their off-peak pattern the same. This, however, results in a loss of comfort
such as setting the air-conditioning temperature at a higher value in summer. Secondly, customers can
respond by shifting some of their activities during peak periods to some other off-peak time. An
example of this is changing the operation time of a pool pump. This, however, may create a new peak
at some other time if a large number of customers decided to shift their activities to close times of a
day. This is called a rebound effect. Also, an industrial customer will be greatly affected by the
postponed activities in terms of lost business. Thirdly, customers can use their own local generation
and this helps them to maintain their habits to a great extent as their pattern of energy consumption will
suffer no or very little alteration on the one hand. On the other hand, the demand seen by the utility will
noticeably change.

The most important DR implementation objectives are as follows

 More efficient utilization of the power market

 Reduction of demand from expensive electricity generating units

 Increasing the short-term capacity

 Avoiding or deferring the need for distribution and transmission infrastructure enforcements
and upgrades

 Reduction of the price of electricity for all electricity consumers

 Reduction of price volatility in the spot market

 Reduction of power interrupts and energy not supplied

 Reliability, power quality, security and stability improvement

It is obvious that the above-mentioned objectives have some overlaps, and sometimes may conflict
with each other. Hence, Independent System Operator (ISO) needs to determine which program best

3
suits their needs. This evaluation should take into consideration not only the load profile characteristics,
but also satisfaction of the customers through reduction of their electricity bills or received
incentives/payments.

2.2 Programs classification

Basically, DR programs can be classified into two classifications as shown in figure-1. Their common
names are Incentive-Based Programs (IBP) and Price-Based Programs (PBP). However, in literature,
they are also named as system- and market-led, emergency- and economic-based, stability- and
economic-based DR programs [3].

Demand Response Programs

Incentive-based Programs (IBP)

Classical

Direct Control

Interruptible/Curtailable Programs

Market-based
Demand Bidding
Emergency DR
Capacity Market
Ancillary services market

Price-based Programs (PBP)

Time of Use (TOU)

Critical Peak Pricing (CPP)

Extreme-day CPP (ED-CPP)

Extreme-day Pricing (EDP)

Real-time Pricing (RTP)

Figure 1 – DR programs classification [3]

4
 IBP can be further categorized into classical and market-based programs. The classical programs
encompass Direct Load Control Programs (DLC) and Interruptible/Curtailable Programs. In these types
of programs, contributing customers receive payments for their participation in these programs usually
in the form of a bill credit or rate discount. While the market-based ones are Demand Bidding,
Emergency DR, Capacity Market, and Ancillary Services market. Participants in these programs are
rewarded with money depending on the level of the reduction in their corresponding load during critical
system conditions.

In DLC Programs, utilities can shut down equipment of the participating customers on a short notice.
It targets mainly residential and small commercial customers. In return, they receive an incentive
payment or rate discount. This also applies to Interruptible/Curtailable Programs participating
customers who are asked through advanced metering infrastructure (AMI) to reduce their consumption
to a predefined value or curtail a specific block of their electric loads. However, in these programs,
non-complying customers may be penalized depending on the terms and conditions of their contracts
with the utility. The number of times or hours the utility can call for interruption/curtailment is capped
(for instance: 200 hours per year). Not all customers can contribute to such programs especially those
with continuous processes. Incentives received by customers vary from one market to another.

Customers bid on specific load reduction in the electricity wholesale market in the Demand Bidding
Programs. If the bid is less than the market price, the bid will be accepted and hence, customers are
obliged to curtail the amount of load in the bid otherwise, they will be subjected to penalties. Or they
would identify how much load they are willing to curtail at the posted prices. In Emergency DR
Programs, curtailment is voluntary but when done, customers receive incentives for measured load
reduction during emergency conditions.

In Capacity Market Programs, customers commit to reduce their loads by predetermined value when
the system undergoes contingencies with which the customers are notified one day ahead. Customers
will be penalized if they do not respond with load reduction. Capacity Market Programs can be seen as
a form of insurance because customers receive guaranteed payments in exchange for being obliged to
reduce their consumption when directed. This is because in some years, contingencies will not occur,
yet, the customers are paid for being on-call. Customers interested in participating in such programs
should demonstrate that load reduction is achievable and sustainable. For example, New York
Independent System Operator (NYISO) set the following requirements to receive capacity payments:
minimum load reductions of 100 kW, minimum four-hour reduction, two-hour notification, and to be

5
subject to one test or audit per capability period. These requirements are designed to ensure that the
reductions can be counted upon when called. Customers partaking in Ancillary Market Programs bid
on load reduction in the spot market as operating reserve. Customers with accepted bids are paid the
spot market price for committing to be on standby and are paid the spot market energy price if load
curtailment is required.

Price-based Programs are based on the fact that electricity prices are not flat and that they fluctuate
to reflect the real-time cost of electricity. These programs aim at offering high prices during peak
periods and lower prices during off-peak times. As shown in figure-1, they are classified to: Time of
use rates (TOU) in which different rates are applied for different blocks of time. The rate design
attempts to reflect the average electricity cost during different time periods. Consumers know in
advance the price for each period. Such pricing may follow system marginal cost to some extent but
these schemes do not convey the dynamics or resource balance of the system. As an improvement to
TOU scheme, Critical Peak Pricing rates (CPP) includes a higher electricity usage price superimposed
on the TOU rates or the flat rates and used during system contingencies or high wholesale electricity
prices for a limited number of days or hours per year. Consumers know these prices in advance but they
are notified when a pricing event is called usually 24 hours ahead.

Extreme-day Pricing (EDP) is similar to CPP in having a higher price for electricity and differs from
CPP in the fact that the price is in effect for the whole 24 hours of the extreme day which is unknown
until a day ahead. In ED-CPP rates, flat rates are used for all days but for extreme days in which CPP
rates are called. Finally, Real-Time Pricing Programs (RTP) charge customers based on the hourly
fluctuating prices that reflect the changes in the real electricity cost in the wholesale market. Customers
are informed about the prices a day or hours ahead. Customers need to monitor the prices and adjust
their consumption accordingly. RTP is a more directly price-conveying program though it involves
additional costs of metering and transactions to customers [3, 4, 5].

3. DR impact

The implementation of different demand response programs has several benefits to different aspects of
the system but there are always some associated costs. The impact of the DR programs depends on
several factors such as: the demand elasticity of customers, the maximum level of response during peak
periods which depends on program participation, the costs of the avoided/deferred generation,

6
transmission, and distribution, load profiles, pricing and incentives or penalties, and cost of program
implementation [4].

3.1 Benefits
The benefits of implementing DR programs fall under four categories as illustrated in figure-2.

The DR programs participants benefit from contribution by savings in their electricity bills in case
of load reduction during peak periods. In some programs, customers whose normal consumption during
peak periods is less than their class may also expect bill savings without reducing their load
consumption. Also, customers can increase their overall energy consumption without incurring any
additional payments in their bills in case of operating more loads during off-peak times. In the classical
IBP, customers receive incentives for participation while in market-based programs, they receive
money depending on their performance.

There are also market-wide benefits for DR programs application. Owing to the efficient utilization
of the available resources, it is expected that the overall electricity prices will be reduced as the demand
from expensive generating units will decline. Furthermore, with the implementation of such programs,
the need for enforcing the distribution and the transmission systems will be avoided or deferred and
consequently, the relevant costs will be also be avoided or deferred and this will be reflected on the
electricity prices for all consumers (those participating in the DR programs and even those who are
not).

The next category to which the employment of DR programs is beneficial is the system reliability
which is separated from market-wide category due to its importance. In a DR program, participants
help in avoiding system outages and benefit from supply continuity and evading electricity interruption.
From the operator point of view, more resources are available to guarantee system reliability and hence,
minimizing system forced outages. DR programs also help relieve congestion and transmission
constraints.

The last category is the electricity market performance. In DR programs, consumers have more
options in the market as they can affect the market performance especially in market-based or real-time
pricing programs even when retail competition is not available. Another feature of market performance
improvement is reducing the price volatility in the spot market. A small reduction in load leads to a
large reduction in generation cost and consequently the electricity prices due to the non-linear relation
between generation and cost as indicated in figure-3, the application of DR programs has a significant
7
impact on electricity prices. Also, due to the impact that consumers would have on the market owing
to their contribution, market power is reduced. That is with demand response applied, large participants
is less likely to influence the market by either withholding their offered capacity in the market or raising
their offered prices in order to increase the market price.

Demand Response Benefits

Participant

Incentive payments

Bill savings

Market wide

Price reduction
Capacity increase
Avoided/deferred infrastructure costs

Reliability

Reduced outages
Customer participation
Diversified resources

Market performance

Reduces market power

Options to customers

Reduces price volatility

Figure 2 – DR benefits classification [3]

Moreover, there are environmental benefits of employing DR programs such as better land utilization
due to the avoided or deferred enforcements of the electrical system. Efficient use of resources also
leads to better air and water quality.

8
 Price ($/MWh) Without DR

With DR

Demand (MWh)

Figure 3 – a simplified DR impact on electricity prices [3]

3.2 Costs
There are different costs associated with the implementation of DR programs as shown in figure-4.

As the figure suggests, both the participant and the program owner incur initial and running costs
[2]. The participant may need to install some technologies to enable him join the DR program such as
local generation, energy management system, or smart devices. Also, the participant should develop
the response plan to follow when required. These initial costs are usually paid by the participant with
expected technical assistance from the program owner. The running costs depend on the response plan
and they can be measurable or immeasurable. The loss of comfort is considered as an immeasurable
DR cost. Running cost that can be measured are like rescheduling industrial processes or the cost of
fuel and maintenance in case of local generation.

From the perspective of the program owner, DR programs require the installation of metering and
communication equipment to measure, store, and transmit data at different time intervals. Incentive
payments in IBP are considered as running costs which might also include program management and
administration costs and the costs of upgrading the billing system especially in PBP to deal with time-
varying electricity prices. There are also the costs of organizing awareness sessions for potential
customers in which different DR programs are explained and typical response plans are discussed to
assure the success of the programs implementation. Moreover, marketing costs to attract new
participants should be considered along with the costs of continuous evaluation and assessment of the
programs to put them on the right track and reach their objectives.

9
 Demand Response Costs

Participant

Initial
Enabling Technology

Response Plan
Running
Inconvenience
Lost business
Rescheduling
Onsite
Program Owner

Initial
Metering and Communication

Billing System
Customer education

Running
Administration

Marketing
Incentive payments

Evaluation

Figure 4 –DR costs classifications [3]

4. Challenges facing DR programs

Even with the positive impacts discussed above, DR has not yet earned a permanent spot in most of the
world’s electricity markets. This is due to the fact that DR implementation faces several challenges.
These challenges can be categorized into three main categories: Consumer’s challenges, producer’s
challenges, and structural challenges [6]. These challenges are further discussed hereunder.

10
4.1 Consumer’s challenges

4.1.1 Consumer’s knowledge

One of the main challenges that face not only the application of DR programs but also any initiative
of improving the performance of electricity markets is the public knowledge and awareness. Most
consumers are not aware of their usage patterns, and hence, it is unlikely that they can alter them. It is
the responsibility of the utility companies to raise the level of knowledge and awareness of the
consumers. This can be fulfilled by exerting more efforts in proper advertising to avoid poor
participation in voluntary programs as the compulsory programs suffers low response levels. This
limited awareness levels do not affect only the development of DR programs but it also slows down the
development of government policies to promote DR initiatives.

Utilities should focus on creating a public dialogue about energy efficiency as a desired goal,
promoting the demand response programs as an effective means of achieving such a goal. More targeted
educational efforts can be employed in altering social behavior toward energy consumption afterwards.
This will raise the cost of administering DR programs though. Combining education with mandatory
participation in programs, on the other hand, might be a more cost-effective solution. Furthermore,
utilities can move their own customers from flat to dynamic rates to encourage DR participation. Once
participation is established, information flowing from utilities to consumers is likely to have a more
significant impact on behavior.

4.1.2 Availability of technology

Technology associated with DR programs implementation should not only allow consumers to know
the cost of the energy they are consuming but it should also enable utilities to precisely monitor real-
time usage patterns of individual users in order to properly distribute earned financial incentives, apply
correct time of use rates to electricity consumption, and so on depending on the program.

This might be an obstacle that slows down the spread and consequently success of demand response
initiatives especially in the residential sector, where costs tend to be high relative to savings, as
compared to commercial customers.

4.1.3 Information feeds

Seeking out price and consumption information may discourage consumers from energy-saving
behavior even in presence of cost savings. Even with a simple curtailment plan, confusion about
11
necessary reductions may occur during a critical peak event. Information search costs can be reduced
by having price and usage information streamed to consumers on an In-home display (IHD) and this
encourages changes in consumption behavior. Combined with variable rates, IHD-using customers also
appeared more likely to respond to changes in rates [14,28]. These IHDs make it easier for customers
to adjust their consumption patterns to changing price conditions, stimulating more energy saving
behavior.

4.1.4 Response fatigue

In some DR programs especially those within which prices vary frequently, consumers grow tired of
keeping track of rates and their usage, and of having to alter their consumption pattern or reprogram
appliances accordingly. This phenomenon is termed as “response fatigue”. As a result of such fatigue,
some consumers may be expected to return to a default flat rate plan.

This, however, can be solved by gradual transition to market signals. The first stage could be a shift
from flat to TOU rates (peak/off-peak). Once consumers familiarize themselves with the process of
consumption adjustments, they can then proceed to more dynamic rate structures, such as real-time
pricing. To prevent reversion to flat rates, the transition process could be supplemented by mandatory
participation requirements. Any deviation from cost minimizing behavior will then appear on the
consumer’s monthly electrical bill. With the observed increase in electricity cost, customers are
encouraged resume their consumption shifts to lower-priced time periods.

4.1.5 Technology cost and financing

In many countries, technology and other infrastructure costs were considered as the main obstacles
behind limited DR programs success. Improving the technological infrastructure is an operational
necessity for demand response programs. So, it is important to ensure that financing options, subsidies,
or cost sharing agreements are available. Also, DR is not possible without smart meters. If it is the
consumer himself who must pay for a smart meter, method and cost of financing become serious
considerations.

4.1.6 Inconvenient potential savings

DR programs depend on cost incentives to persuade consumers to alter their electricity usage
patterns. However, this might not be persuasive enough. One must look also at the potential impact of
savings on overall financial expenditures of the consumer. If electricity cost is a small percentage of

12
consumers’ total expenditure, as it tends to be in most countries, it may not be worth a customer’s effort
to invest in understanding time-varying prices that DR programs offer and to participate in them.
Maintaining a large gap between peak and off-peak prices may tempt consumers to shift to off-peak
times.

4.1.7 Satisfying behavior in switching patterns

Owing to the high volume of information consumers should be able to process when participating in
a DR program, their decision to seek new information about alternative electricity decisions will most
probably be based on their dissatisfaction with their current service. So, even if there will be potential
financial gains from shifting to an alternative provider or program, consumers will be unlikely to pursue
these gains unless they are dissatisfied.

With the relatively-small cost incentives from the total income perspective DR programs currently
offer, many customers end up basing their decision to switch from or stay with their current
provider/program on the quality of the company and electricity being offered, rather than its cost. Yet,
providers may still be able to get consumers to transition to more market-based rate plans by providing
multiple dynamic pricing options within their service area.

4.2 Producer’s challenges

4.2.1 Investment recovery

Mainly, financial obstacles are the main challenges which face demand response programs initiation
from the producer’s point of view. If a firm is not certain that it will be able to recover its initial costs,
it will not invest in the programs. Despite the fact that benefits of efficient usage are realized by the
entire industry, the cost of providing the proper infrastructure to facilitate efficient use typically falls
on a few firms. So, in order to ensure that investment that leads to industry-wide benefits is undertaken,
the government needs to establish formal channels of investment recovery. These could include formal
subsidies to the firm as well as a combination of mandatory customer participation requirements and
monthly participation fees. Mandatory participation would in this instance ensure high subscription
rates, allowing the provider to keep participation fees low while still recovering its investment in a
reasonable amount of time.

13
4.2.2 Promotional responsibility
DR has been slow to spread because it is unclear which segment of the electricity market should take
responsibility for bringing these programs online. As the ultimate benefit from these programs would
go to both the wholesale and retail segment of the industry, more coordination and cooperation along
the electricity supply chain is needed for successful implementation of lasting demand response
initiatives.

4.2.3 Managerial incentives

Demand response programs are designed to lower demand during the highest usage periods, when
electricity is most expensive. Lowering peak usage may actually result in a loss of revenue for the firm.
If profit margins on peak generation are lower than they are on off-peak generation, a loss of revenue
may occur. As a result, a firm manager will have no incentives to invest in demand response; quite on
the contrary, he may be inclined to increase power usage levels at all times so as to ensure a healthy
cash flow for the company.

One way of overcoming this disincentive problem is to index managerial remuneration not only to
financial performance, but to a combination of utility’s fiscal success (for instance, a separate
evaluation of revenues and average generation costs, the latter of which will decline as more peak
demand is shifted to off-peak periods) and technical reliability. Since managers effectively dictate the
direction of the company they oversee, aligning managerial incentives with DR development will do a
great deal to incorporate market-based price signals into power sector management.

4.3 Structural challenges

4.3.1 Program structure (rates, technology, ...etc.)

Because consumer’s response to dynamic rates depends on a multitude of regional and demographic
variations, such as incomes, education levels, climate conditions, and so on, devising an appropriate
rate structure should be an ongoing process. Variable rates should be continually adjusted to maximize
response levels until congestion-based price difference is large enough to induce sizable shifts in usage.
Once an appropriate rate structure is set, regulators need to continue to account for changes. Regular
revisions will ensure that rates of response of usage to price changes continue to remain high, smoothing
out intertemporal demand peaks, reducing network congestion, and lowering generation costs.

14
4.3.2 Regulatory (restructuring) process and policy support
Sometimes, the degree of participation in DR programs depends highly on market design. In most
cases, regulatory intervention, such as development of targeted rather than broad restructuring
procedures, is needed in order to sustain DR programs in reorganizing markets. Government regulation
still has an important role to play in ensuring timely investment in demand side management, and
promoting DR as a competitive method of alleviating excessive burden placed on existing supply
networks and of balancing electricity supply and demand.

5. Demand response programs of different ISOs/RTOs

In this section, some demand response programs active in North America are summarized [12].

5.1 ISO New England (ISO-NE)

Three incentive-based DR programs are offered by ISO-NE, namely: real-time demand (RT-
Demand), real-time price (RT-Price), and day-ahead load response program (DALRP).

Consumers in RT-Price program reduce their demand if prices go beyond a certain value in real-
time. Communication of real-time meter data the ISO in RT-Demand determines mainly the energy
price that the participants receive for their curtailed load. In DALRP, customers may partake indirectly
to the day-ahead energy market settlement.

It is worth mentioning that a load response program (LRP) was initiated during 2001 which offered
two options: Class-1, in which consumers had to commit reduce their load by 100 kW to 5 MW and
get incentives in return for their participation and their saved consumption. And Class-2, in which
participating customers could voluntarily reduce their energy consumption by 100 kW to 5 MW.
Customers were able to participate for a certain period of time specified by the ISO.

5.2 California statewide CPP program

This project started during 2003 and was carried out by three investor-owned utilities in California:
Pacific Gas and Electric Company, Southern California Edison, and San Diego Gas and Electric
Company. 2500 residential and small commercial customers are involved in this program which tests
the response of the residential consumers to CPP program. Customers are offered a CPP tariff in which
prices were discounted during the normal days and higher prices are dispatched during system peaks.

15
5.3 New York Independent System Operator (NYISO)
Five DR programs are offered: emergency DR program (EDRP), special case resource program
(SCR), targeted DR program (TDRP), day-ahead DR program (DADRP), and demand side ancillary
service program (DSASP).

SCR customers are paid for their load reductions and penalized when committed load curtailment is
not fulfilled. DADRP customers submit bids into day-ahead market (DAM) when they offer a load
curtailment above a certain bid price. Also, some programs allow demand side to provide ancillary
services such as regulation, synchronous reserve, and non-synchronous reserve services that can be
offered to NYISO ancillary service markets in DSASP.

5.4 PJM interconnection

It has separate energy, capacity, and ancillary services markets and offers three incentive-based
programs: emergency, active load management (ALM), and economic load response programs.

In ALM, it was possible to reduce the consumption of electricity for six hours each day for a period
of 10 days. In this program, customers are required to commit before the start of the summer. Direct or
indirect load scheduling is available for customers participating in economic load response programs
to get into real-time market. There is also the possibility to partake in different ancillary services
markets. The minimum acceptable capacity of DR participants in PJM interconnection is 100 kW.

5.5 DR in Ontario [13]

There were some primary programs implemented by Independent Electricity System Operator of
Ontario (IESO) such as Targeted Demand Response Program (TDRP) and Emergency load reduction
program (ELRP). But owing to some of the challenges mentioned in part 4 above, these programs
suffered the lack of contribution from customers.

In 2006, the Ontario Power Authority (OPA) initiated a program in Northern York region which
signals the commercial and industrial customers in the affected area to curtail their demand to relieve
the system peaks till system reinforcements take place. The program was a success and hence, this
encouraged several Local Distribution Companies (LDCs) to initiate some similar programs. This
helped to get the public familiar with the demand response programs.

In 2007, a new program (DR3) was introduced by the OPA. This program paid for the availability
on a monthly basis even when there was no event of curtailment, and also paid a utilization incentive
16
in case of an incident. This program was more successful than two other programs (DR1 and DR2) as
it offered flexible contract terms. DR1 was a semi-voluntary program with lower incentives, and DR2
witnessed some success with customers that could permanently shift their demand from peak to off-
peak periods. Under IESO, DR3 was renamed to Capacity Based Demand Response (CBDR) to allow
DR3 participating customers to continue their contracts till their expiry by 2018.

6. Simulation

To study the impact of demand response on market prices, optimal power flow solution is obtained for
IEEE 14-bus system in two cases: the base case, in which no demand response is considered. And the
DR case, OPF solution is found while considering demand response. The solution is developed using
GAMS optimization environment.

6.1 Optimal power flow formulation

The objective function to be minimized in this project simulation is the operating costs. In this
project, it is considered that the utility will pay the consumers participating in the demand response
program a specific amount of money for the curtailed load. Hence, the objective function to be
minimized using GAMS is the total costs incurred by the utility which is the summation of the
generation costs represented by the generators cost functions and the incentives paid to the consumers
in case of load curtailment (demand response). So,

∗ 1 ∗ … 1

Where: is the total number of generators, is the active power generated at bus , is the total
number of buses, is the incentive paid by the utility to the consumers for the curtailed load in $/ ,
is the load scaling factor which is used to represent the reduction in the load at certain bus , it is
introduced to simulate demand response at bus , and is the active power load at bus . In the base
case, no demand response is considered, and hence, 1 and the problem is a classic OPF problem.

The constraints of this optimization problem are:

1. The power flow equations (active and reactive power balance equations) as follows:

17
 . ∗ ∗ ∗ cos ∗ sin 0 … 2

And,

. ∗ ∗ ∗ sin ∗ cos 0 … 3

Where: . is the total active power injected into the system at bus , . is the total reactive
power injected into the system at bus , and are the magnitudes of the voltages at buses and
respectively, and is the real and imaginary parts of the element in the bus admittance matrix
of the system respectively, and and are the voltage angles at buses and respectively.

2. Generators maximum and minimum active power limits:

, for 1,2, … , … 4

3. Generators maximum and minimum reactive power limits:

, for 1,2, … , . . , 5

4. Bus voltage magnitude upper and lower limits:

, for 1,2, … , … 6

5. Bus voltage angle upper and lower limits:

, for 1,2, … , … 7

6. Load scaling factors at each bus: in this project, it is considered that the upper and lower limits
of the load scaling factors to be 1 and 0.8 respectively. That is:

0.8 1, for 1,2, … , … 8

Where: is the total number of load buses.

The system data is the typical IEEE 14-bus system data as indicated in Appendix-A. GAMS code
used is indicated in Appendix-B.

18
6.2 Results of the typical model

6.2.1 Base case

The simulation is carried out for the base case to get the minimum value of the objective function
defined by equation no.1 above. The solution was:

. $/

Also, the locational active power marginal costs at each bus were obtained and listed in table-2. In
this case, all the load scaling factors were set to their upper limit. That is:

, 1 for 1,2, … , … 9

Locational active power marginal costs

Bus no.
in ($/MWh)
1 4.12861

2 4.26841

3 4.48658

4 4.52341

5 4.46224

6 4.46482

7 4.53061

8 4.53061

9 4.53096

10 4.54906

11 4.5234

12 4.55147

13 4.59192

14 4.74203

Table 2 – Base case locational active power marginal costs (typical model)

19
6.2.2 DR case
The same was carried out for the case when there is a demand response in which utilities pay
consumers incentives to curtail loads. In this project, it is assumed that the minimum value of is
0.8 and the incentive value for the curtailed load is 4.4 $/ which is comparable to the
locational marginal costs obtained in the base case and it is assumed to be the same at all load buses.
The optimum solution was found to be:

. $/

So, the total costs in the DR case was lower than those of the base case. The load scaling factor at
each bus was left free to change in the range between 0.8 and 1 in order also to get the values of the
locational load scaling factors that yield the optimum solution (minimum incurred costs by the utility).
The results are listed in table-3 and they show that the LSF to obtain the minimum costs change from
one bus to the other within the range specified. It also shows that for some buses, the LSF is still equal
to the upper limit of 1 as the base case. This is because of the incentives paid by the utilities to the
consumers for the curtailed load which also need to be minimized as part of the objective function.
There is no LSF calculated for buses 1, 7, and 8 as there are no loads connected to these buses.

Bus no. LSF Bus no. LSF

1 N/A 8 N/A

2 1 9 1

3 1 10 0.8

4 0.956 11 0.8

5 1 12 0.8

6 1 13 0.8

7 N/A 14 0.8

Table 3 – Optimum solution locational load scaling factors of the DR case (typical model)

The locational active power marginal costs were also found in the DR case and they are listed in
table-4. It can be seen that there is a reduction in the marginal costs at each bus which means a reduction
in electricity locational marginal prices (LMPs) as a result of the demand response program being
adopted while considering the minimization of the costs from the point of view of the utility as the

20
objective as discussed above. Figure-5 shows a comparison between the two cases in terms of the
locational marginal costs obtained.

Locational active power marginal costs

Bus no.
in ($/MWh)
1 4.03135

2 4.17112

3 4.3815

4 4.40416

5 4.34508

6 4.34455

7 4.41178

8 4.41178

9 4.41287

10 4.42455

11 4.39788

12 4.41425

13 4.45088

14 4.59053

Table 4 – DR case locational active power marginal costs (typical model)

21
 4.8

4.6
Marginal costs in $/MWh

4.4

4.2
Base case

4 DR case

3.8

3.6
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Bus no.

Figure 5 –Locational marginal costs at each bus in both cases (typical model)

From the results above, the differences either in total costs incurred by the utility and the locational
marginal costs at each bus in both cases are not significant. This is due to the small values of the
coefficients of the generators cost functions.

Some modifications are made to this system to illustrate the impact of the demand response on the
electricity prices. This modified model considers different generators cost function coefficients as listed
in Appendix-A [9]. Another modification was done to the model which is: in the elastic demand case,
the total curtailed load is capped as follows:

for 1,2, … , … 10

Where: is a variable as indicated in the GAMS code. This is a new constraint added to the original
OPF problem. The results are hereunder.

6.3 Results of the modified model

6.3.1 Base case

The obtained minimum value of the objective function defined by equation no.1 above is:

22
 . $/

Also, the locational active power marginal costs at each bus were obtained and listed in table-5. In
this case, all the load scaling factors were set to their upper limit with the value of 1.

Locational active power marginal costs

Bus no.
in ($/MWh)
1 27.07028

2 27.94984

3 29.38145

4 29.62816

5 29.23046

6 29.24589

7 29.67523

8 29.67523

9 29.67779

10 29.79659

11 29.62904

12 29.81389

13 30.07984

14 31.06759

Table 5 – Base case locational active power marginal costs (modified model)

6.3.2 DR case
The same was carried out for the case when there is an elastic demand. Here, it is assumed that the
minimum value of is 0.8 and the incentive value for the curtailed load is 25 $/ and it
is assumed to be the same at all load buses. Also, mentioned in equation-10 above is set to 10. The
optimum solution was found to be:

. $/

The values of the locational load scaling factors that yield the optimum solution (minimum incurred
costs by the utility) are listed in table-6.
23
 Bus no. LSF Bus no. LSF

1 N/A 8 N/A

2 1 9 0.8

3 0.881 10 0.919

4 0.8 11 1

5 1 12 1

6 1 13 0.8

7 N/A 14 0.8

Table 6 – Optimum solution locational load scaling factors of the DR case (modified model)

The locational active power marginal costs were also found in the DR case and they are listed in
table-7. The two cases are compared in figure-6.

Locational active power marginal costs

Bus no.
in ($/MWh)
1 23.46827

2 24.03754

3 25.04195

4 25.30177

5 25.03478

6 25.05101

7 25.32222

8 25.32222

9 25.32074

10 25.42847

11 25.33043

12 25.51439

13 25.67474

14 26.47346

Table 7 – DR case locational active power marginal costs (modified model)

24
 35

30
Marginal costs in $/MWh

25

20

15 Base case
DR case
10

0
1 2 3 4 5 6 7 8 9 10 11 12 13 14
Bus no.

Figure 6 –Locational marginal costs at each bus in both cases (modified model)

7. Conclusion

As illustrated in the above-discussed models, it is evident that demand response performed by elastic
demand has a positive impact on electricity locational marginal costs at the buses where the demand
response takes place as it helps reduce these costs even when the curtailed load is capped. This in return
has direct influences the locational marginal prices (LMPs) of electricity at these buses and this
increases the social welfare and market efficiency.

25
 REFERENCES

[1] P. Palensky and D. Dietrich, “Demand side management: Demand response, intelligent energy
systems, and smart loads,” IEEE Trans. Ind. Inform., vol. 7, no. 3, pp. 381–388, Aug 2011.
[2] Benefits of Demand Response in Electricity Markets and Recommendations for Achieving Them,
U.S. Dept. Energy, Washington, DC, USA, Tech. Rep., Feb. 2006.

[3] M. H. Albadi and E. F. El-Saadany, “A summary of demand response in electricity markets,” Elect.
Power Syst. Res., vol. 78, no. 11, pp. 1989–1996, 2008.

[4] Greening LA. Demand response resources: Who is responsible for implementation in a deregulated
market? Energy 2010;35:1518-25.
[5] Aalami HA, Parsa Moghaddam M, Yousefi GR. Demand response modeling considering
interruptible/curtailable loads and capacity market programs. Applied Energy 2010;87(1):243–50.
[6] Kim JH, Shcherbakova A. Common failures of demand response. Energy 2011; 36:2.

[7] Power Systems Test Case Archive, University of Washington.

http://www2.ee.washington.edu/research/pstca/

[8] IEEE 14-bus system datasheet.

http://www.academia.edu/7781632/A_DATA_SHEETS_FOR_IEEE_14_BUS_SYSTEM
[9] R. Billinton and S. Kumar, “A reliability test system for educational purposes—Basic data,”
IEEE Trans. Power Syst., vol. 4, no. 3, pp. 1238– 1244, Aug. 1989.
[10] M.H. Albadi, E.F. El-Saadany, Demand response in electricity markets: an overview, in: IEEE PES
GM, Montreal, 2007, pp. 1–5.

[11] D.S. Kirschen, Demand-side view of electricity markets, IEEE Trans. Power Syst. 18 (2003) 520–
527.

[12] Shariatzadeh F, Mandal P, Srivastava AK. Demand response for sustainable energy systems: a
review, application and implementation strategy. Renew Sustain Energy Rev 2015;45:343–50.
[13] The Evolution of Demand Response in Ontario, an article by Rick Goddard published in the April
2015 edition of 20/20 Canadian Manufacturers and Exporters’ Magazine.

26
 APPENDIX-A

IEEE 14-bus system is shown hereunder.

Figure 7 –IEEE 14-bus system

The system lines and transformer data is listed in table-8. The data are given in per unit on a 100
MVA base. Also, the active and reactive power loads are given in table-9 [7]. The generators data for
the typical system is listed in table-10 where the generator cost function is given in the form:

$/ for 1,2, … , … 11

27
From bus To bus Resistance Reactance Line charging Transformer
no. no. (pu) (pu) susceptance (pu) tap ratio

1 2 0.01938 0.05917 0.0528 N/A

1 5 0.05403 0.22304 0.0492 N/A

2 3 0.04699 0.19797 0.0438 N/A

2 4 0.05811 0.17632 0.0340 N/A

2 5 0.05695 0.17388 0.0346 N/A

3 4 0.06701 0.17103 0.0128 N/A

4 5 0.01335 0.04211 0 N/A

4 7 0 0.20912 0 0.978

4 9 0 0.55618 0 0.969

5 6 0 0.25202 0 0.932

6 11 0.09498 0.19890 0 N/A

6 12 0.12291 0.25581 0 N/A

6 13 0.06615 0.13027 0 N/A

7 8 0 0.17615 0 N/A

7 9 0 0.11001 0 N/A

9 10 0.03181 0.08450 0 N/A

9 14 0.12711 0.27038 0 N/A

10 11 0.08205 0.19207 0 N/A

12 13 0.22092 0.19988 0 N/A

13 14 0.17093 0.34802 0 N/A

Table 8 – Lines and transformers data [7]

28
 Bus no. Active power load (MW) Reactive power load (MVAR)

2 21.7 12.7

3 94.2 19.0

4 47.8 -3.9

5 7.6 1.6

6 11.2 7.5

9 29.5 16.6

10 9.0 5.8

11 3.5 1.8

12 6.1 1.6

13 13.5 5.8

14 14.9 5.0

Table 9 – Active and reactive power load data [7]

Generator Pmin Pmax Qmin Qmax a b c

at bus no. (MW) (MW) (MVAR) (MVAR) ($/(MW)2.h) ($/MWh) ($/h)

1 10 160 0 0 0.005 2.45 105

2 20 80 -40 50 0.005 3.51 44.1

3 20 50 0 40 0.005 3.89 40.6

6 - - -6 24 - - -

8 - - -6 24 - - -

Table 10 – Generators capacities and cost coefficients (typical model) [7,8]

The generators data for the modified model is listed in table-11.

29
Generator Pmin Pmax Qmin Qmax a b c
at bus no. (MW) (MW) (MVAR) (MVAR) ($/(MW)2.h) ($/MWh) ($/h)

1 10 160 0 0 0.05 11.50 105

2 20 80 -40 50 0.05 11.75 44.1

3 20 50 0 40 0.05 11.9375 40.6

6 - - -6 24 - - -

8 - - -6 24 - - -

Table 11 – Generators capacities and cost coefficients (modified model) [9]

30
 APPENDIX-B

The GAMS code used to solve the OPF problem in different cases is hereunder. The admittance matrix
real and imaginary parts listed in the GAMS code were calculated using the system lines and
transformers data listed in table-8 in Appendix-A.

$Title OPF IEEE 14 bus system

sets

G index of generators /G1*G5/

N index of buses /N1*N14/

MAP(G,N) associates generators with buses /G1.N1,G2.N2,G3.N3,G4.N6,G5.N8/

** The data are provided below. The first table contains different columns

** of data for every generator. The names of these columns have not been

** previously declared as elements of a set, so they should be referenced

** using the symbol '*'.

** The same applies to the second table.

table GDATA(G,*) generator input data

PMIN PMAX QMIN QMAX a b c

* (W) (W) (Var) (Var)

G1 0.1 1.6 0.0 0.0 0.05 11.50 105

G2 0.2 0.8 -0.4 0.5 0.05 11.75 44.1

G3 0.2 0.5 0.0 0.4 0.05 11.9375 40.6

G4 0.0 0.0 -0.06 0.24 0.05 2.450 0

G5 0.0 0.0 -0.06 0.24 0.05 2.450 0;

31
table BUS(N,*)

VMIN VMAX PL QL

* (V) (V) (W) (Var)

N1 0.95 1.05

N2 0.95 1.05 0.217 0.127

N3 0.95 1.05 0.942 0.19

N4 0.95 1.05 0.478 -0.039

N5 0.95 1.05 0.076 0.016

N6 0.95 1.05 0.112 0.075

N7 0.95 1.05

N8 0.95 1.05

N9 0.95 1.05 0.295 0.166

N10 0.95 1.05 0.090 0.058

N11 0.95 1.05 0.035 0.018

N12 0.95 1.05 0.061 0.016

N13 0.95 1.05 0.135 0.058

N14 0.95 1.05 0.149 0.050;

alias(N,NP);

32
table R(N,NP) real component Ybus

N1 N2 N3 N4 N5 N6 N7 N8 N9 N10 N11 N12 N13 N14

N1 6.025 -4.999 0.0 0.0 -1.026 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N2 -4.999 9.521 -1.135 -1.686 -1.701 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N3 0.0 -1.135 3.121 -1.986 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N4 0.0 -1.686 -1.986 10.513 -6.841 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N5 -1.026 -1.701 0.0 -6.841 9.568 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N6 0.0 0.0 0.0 0.0 0.0 6.580 0.0 0.0 0.0 0.0 -1.955 -1.526 -3.099 0.0

N7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N8 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N9 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 5.516 -3.902 0.0 0.0 0.0 -1.424

N10 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -3.902 5.783 -1.881 0.0 0.0 0.0

N11 0.0 0.0 0.0 0.0 0.0 -1.955 0.0 0.0 0.0 -1.881 3.836 0.0 0.0 0.0

N12 0.0 0.0 0.0 0.0 0.0 -1.526 0.0 0.0 0.0 0.0 0.0 4.015 -2.489 0.0

N13 0.0 0.0 0.0 0.0 0.0 -3.099 0.0 0.0 0.0 0.0 0.0 -2.489 6.725 -1.137

N14 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 -1.424 0.0 0.0 0.0 -1.137 2.561;

33
table B(N,NP) real component Ybus

N1 N2 N3 N4 N5 N6 N7 N8 N9 N10 N11 N12 N13 N14

N1 -19.447 15.263 0.0 0.0 4.235 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N2 15.263 -30.272 4.782 5.116 5.194 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N3 0.0 4.782 -9.822 5.069 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N4 0.0 5.116 5.069 -38.654 21.579 0.0 4.890 0.0 1.855 0.0 0.0 0.0 0.0 0.0

N5 4.235 5.194 0.0 21.579 -35.574 4.257 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

N6 0.0 0.0 0.0 0.0 4.257 -17.341 0.0 0.0 0.0 0.0 4.094 3.176 6.103 0.0

N7 0.0 0.0 0.0 4.890 0.0 0.0 -19.549 5.677 9.090 0.0 0.0 0.0 0.0 0.0

N8 0.0 0.0 0.0 0.0 0.0 0.0 5.677 -5.677 0.0 0.0 0.0 0.0 0.0 0.0

N9 0.0 0.0 0.0 1.855 0.0 0.0 9.090 0.0 -24.283 10.365 0.0 0.0 0.0 3.029

N10 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 10.365 -14.768 4.403 0.0 0.0 0.0

N11 0.0 0.0 0.0 0.0 0.0 4.094 0.0 0.0 0.0 4.403 -8.497 0.0 0.0 0.0

N12 0.0 0.0 0.0 0.0 0.0 3.176 0.0 0.0 0.0 0.0 0.0 -5.428 2.252 0.0

N13 0.0 0.0 0.0 0.0 0.0 6.103 0.0 0.0 0.0 0.0 0.0 2.252 -10.670 2.315

N14 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 3.029 0.0 0.0 0.0 2.315 -5.344;

** Constant PI is used to state limits on bus angles.

** k is a variable to reflect capping of the curtailed load.

scalar

PI /3.1416/

k /10/;

34
** Optimization variables are declared.

variables

z objective function variable

p(G) active power output for generator G

q(G) reactive power output for generator G

v(N) voltage magnitude at bus N

d(N) voltage angle at bus N

LSF(N) load scaling factor at bus N

positive variable p, LSF;

** Limits are stated on variables using previously defined data.

p.lo(G)=GDATA(G,'PMIN');

p.up(G)=GDATA(G,'PMAX');

q.lo(G)=GDATA(G,'QMIN');

q.up(G)=GDATA(G,'QMAX');

v.lo(N)=BUS(N,'VMIN');

v.up(N)=BUS(N,'VMAX');

d.lo(N)=-PI;

d.up(N)=PI;

LSF.up(N)=1.0;

LSF.lo(N)=0.8;

*LSF.fx(N)=1;

LSF.fx('N1')=0;

LSF.fx('N7')=0;

LSF.fx('N8')=0;

35
** Active power of G4 and G5 are set to zero. They are only considered as

** synchronous condensers in the system.

p.fx('G4')=0.0;

p.fx('G5')=0.0;

** Constraints are declared.

equations

COST objective function

PBAL(N) active power balance constraints

QBAL(N) reactive power balance constraints

MCL maximum curtailed load constraint;

** The objective function is an equality constraint.

** The remaining constraints are defined using different functions.

COST.. z =e=
sum(G,GDATA(G,'a')*power(p(G)*100,2)+GDATA(G,'b')*p(G)*100+GDATA(G,'c'))+sum(N,25*(1
-LSF(N))*100*BUS(N,'PL'));

PBAL(N).. sum(G$MAP(G,N),p(G))-LSF(N)*BUS(N,'PL') =e=

sum(NP,v(N)*v(NP)*(R(N,NP)*cos(d(N)-d(NP))+B(N,NP)*sin(d(N)-d(NP))));

QBAL(N).. sum(G$MAP(G,N),q(G))-LSF(N)*BUS(N,'QL') =e=

sum(NP,v(N)*v(NP)*(R(N,NP)*sin(d(N)-d(NP))-B(N,NP)*cos(d(N)-d(NP))));

MCL.. sum(N,LSF(N)) =g= k;

** The sentences below define the optimal power flow problem with all its constraints, and direct
GAMS to solve the problem using the nlp solver.

option nlp=minos;

model opf /all/;

solve opf using nlp minimizing z;

display PBAL.M
36