A constrained price-based demand response framework employing utility functions in three-state Overlapping Generation and Gift and Bequest based model in distribution system

Demand response provides an opportunity for consumers to play a significant role in the operation of the electric grid by reducing or shifting their electricity usage during peak periods in response to time-based rates or other forms of financial incentives. These programs are important as they have the potential to help electricity providers save money through reductions in peak demand and the ability to defer construction of new power plants and power delivery systems specifically, those reserved for use during peak times. For the successful application of DR in day-to-day life, DR models are necessary to be implemented. Many of the existing DR models primarily focus on the formulation of after-DR demand based on price elasticity. Though these models are devoid of basic humans’ micro-economic behavior, which is an essential part of a DR stakeholder. Considering these shortcomings of the existing DR literature, this paper envisages formulating DR models based on the foundation of basic humans’ manifestations of demand flexibility, willingness, load recovery, and altruistic behavior. Hence, this paper proposes two price-based DR models known as the three-state Overlapping Generation (OLG) model and the Gift and Bequest (G&B) based DR model. These models are based on customers’ microeconomic behaviors and are suitable for representing load recovery with minimal parameters. Both three-state OLG and G&B-based DR models are examined on IEEE 33-bus and 118-bus distribution systems and are compared with the existing price-elasticity model (PEM) and two-state OLG-based DR model.