Dynamic pricing design for demand response integration in power distribution networks

Duong Tung Nguyen, Hieu Trung Nguyen, Long Bao Le

Research output: Contribution to journalArticlepeer-review

131 Scopus citations


This paper presents optimal pricing design for demand response (DR) integration in the distribution network. In particular, we study the energy scheduling problem for a load serving entity (LSE) that serves two types of loads, namely inflexible and flexible loads. Inflexible loads are charged under a regular pricing tariff while flexible loads enjoy a dynamic pricing tariff that ensures cost saving for them. Moreover, flexible loads are assumed to be aggregated by several DR aggregators. The interaction between the LSE and its customers is formulated as a bilevel optimization problem where the LSE is the leader and DR aggregators are the followers. The optimal solution of this problem corresponds to the optimal pricing tariff for flexible loads. The key advantage of the proposed model is that it can be readily implemented thanks to its compatibility with existing pricing structures in the retail market. Extensive numerical results show that the proposed approach provides a win-win solution for both the LSE and its customers.

Original languageEnglish (US)
Article number7372487
Pages (from-to)3457-3472
Number of pages16
JournalIEEE Transactions on Power Systems
Issue number5
StatePublished - Sep 2016
Externally publishedYes


  • Bilevel programming
  • complementarity modeling
  • demand response
  • dynamic pricing
  • load serving entity

ASJC Scopus subject areas

  • Energy Engineering and Power Technology
  • Electrical and Electronic Engineering


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