An economic price based demand response using overlapping generation model in distribution systems

Demand response (DR) is a conducive phenomenon to enable interaction between the supplier and customers in the power system. It is usually described through DR models. However, modeling the customer's response in DR is a complex and rigorous approach. It requires a sophisticated model to generalize their load behavior. Hence, a price-based DR model using a microeconomics behavioral framework known as Overlapping Generation (OLG) is proposed to represent the customer's load behavior with minimal parameters. OLG is a multi-state, discrete time-variant model, and changes its consumption with the variation in interest rate, and a degree of risk-aversion. These characteristics in DR are envisioned through a change in the relative price of the different periods and customer's willingness, respectively. Further, load recovery in DR is deduced using human altruistic behavior. The proposed model is investigated on 33-bus and Indian 108-bus distribution systems and is compared with the existing DR models. Numerical results show the adequacy of the proposed model to represent the customer's load behavior appropriately.