Modeling and Implementation of Incentive Interruptible Load Contracts in Electricity Markets

Interruptible load contract is an effective tool to evade the risk of market price of power companies in electricity market. Based on the mechanism design theory, this paper develops an incentive interruptible load contract model for discrete customer types, which takes risk preference of power companies into account. The proposed model will lead customers to voluntarily reveal their true customer types, and choose the right contracts. A numerical example is presented to verify the effectiveness of the proposed model.