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A field study using an adaptive in-house pricing model for commercial and industrial customers in Korea

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  • Kim, Min-Jeong

Abstract

Demand response programs provide customers with economic incentives for load reductions at times of high market prices and system reliability constraints. One type of demand response programs, price-based program, induces customers to respond to changes in product rates. However, some large-scale customers find it difficult to change their electricity consumption patterns, even with rate changes, because their electricity demands are commercial and industrial. This study proposes an adaptive in-house pricing model for large-scale customers, particularly those with multiple business facilities, for self-regulating price-based program. The adaptive in-house pricing model charges higher rates to customers with lower load factors by employing a peak-to-off-peak usage ratio in order to reduce usage at times of high prices at each facility. This study analyzes the daily electricity consumption patterns of large-scale customers through a field trial of the proposed pricing model at a telecom company with 447 offices and worksites for one month. The results show that the pricing model corresponds to average reductions of 3.54–28.69% during peak-demand times for four different types of workplaces. However, reductions in electricity consumption during off-peak periods did not show a significant difference. The results of this study prove that this proposed pricing model can be successfully applied to large-scale operations.

Suggested Citation

  • Kim, Min-Jeong, 2017. "A field study using an adaptive in-house pricing model for commercial and industrial customers in Korea," Energy Policy, Elsevier, vol. 102(C), pages 189-198.
    • Handle: RePEc:eee:enepol:v:102:y:2017:i:c:p:189-198
    DOI: 10.1016/j.enpol.2016.12.024
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    References listed on IDEAS

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    1. Sulaima, Mohamad Fani & Dahlan, Nofri Yenita & Yasin, Zuhaila Mat & Rosli, Marlinda Mohd & Omar, Zulkiflee & Hassan, Mohammad Yusri, 2019. "A review of electricity pricing in peninsular Malaysia: Empirical investigation about the appropriateness of Enhanced Time of Use (ETOU) electricity tariff," Renewable and Sustainable Energy Reviews, Elsevier, vol. 110(C), pages 348-367.
    2. Said, Fathin Faizah & Babatunde, Kazeem Alasinrin & Md Nor, Nor Ghani & Mahmoud, Moamin A. & Begum, Rawshan Ara, 2022. "Decarbonizing the Global Electricity Sector through Demand-Side Management: A Systematic Critical Review of Policy Responses," Jurnal Ekonomi Malaysia, Faculty of Economics and Business, Universiti Kebangsaan Malaysia, vol. 56(1), pages 71-91.

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