A Primary Market for Optimizing Power Peak-Load Demand Limits

Abstract

In this paper the authors propose a market-based mechanism for organizational units of Commercial and Industrial power consumers or companies in a consortium to reduce their peak power demand. The market mechanism requires participants’ bids to indicate the value they associate with power needed to run various services, and the power quantity requirement for these services over a time horizon. The market resolution produces peak demand allocation, i.e., determination of the peak demand and the associated cost that the units need to pay. The global peak-demand is then derived by optimizing individual participants’ peak demand. The market mechanism is based on decision optimization, and guarantees the formally defined properties of Pareto optimality, Nash equilibrium and benefit distribution fairness.