Participation model for small customers using reliability preference in demand dispatch

Demand-side Participation by small customers is more complicated than large electricity customers due to existing support infrastructure, regulatory concern and conventional business model. Motivated by contemporary development in New Zealand electricity industry, a pricing and load dispatch model is proposed to utilize the savings from Demand Dispatch to compensate for the reliability cost of load control. A concept of Reliability Premium is proposed, by which customers can choose different levels of their reliability preference and adjust network tariff payments accordingly. It also gives indication of their willingness to reduce consumption through Demand Dispatch. The Reliability Premium based load dispatch formulation is simulated to demonstrate its benefit to help conduct demand-side bidding and set a limit to prevent load control from being excessively used on small customers who choose to pay lower amount of the Reliability Premium.