Determination of the optimal incentives and amount of load reduction for a retailer to maximize profits considering Demand Response programs

A system called demand response programs (DRP) is being introduced among various countries owing to the lack of new generation capacity and the higher fuel generation cost. It is a program which provides for the end-users to select their consumption of electricity by recognizing the value of their consumption in real time. That is, Demand Response 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 or other signals. It is expected that the effects of DRP are preventing price spike, improving supply reliability and social welfare and increasing option of customers. Considering the customerpsilas thermal comfort zone, this paper determines the most profitable combination of optimal incentives and amounts of load reduction for a retailer to maximize profits according to predicted outdoor temperatures while implementing DRP.