Time of use electricity pricing in power system planning and operation: Case study of Nepalese power system

Abstract The difference between load demand in the off-peak and peak period is usually high in the context of Nepal, and the high peak load for a short time is the main reason for insufficiency in electricity, frequent electricity outage, and poor power quality. This paper investigates the effectiveness of the time of use (TOU) strategy to reduce peak demand and to improve power quality. TOU electricity price is one of the electric demand response (DR) strategies, which may motivate the customers to reduce their consumption in peak periods and shift load in the off-peak period, which propel the electricity industry towards a higher efficiency compared to that of common flat prices. In this paper, a process based on an equal step length iteration algorithm is used to obtain an optimal period partition. Using the particle swarm optimization (PSO) algorithm, a TOU-based optimization model is proposed to find the optimal electricity price. Then, its impact on peak demand reduction and voltage fluctuation is analyzed. The impact of TOU price on peak demand reduction is investigated in the hourly load profile of Nepal, which indicates the significant reduction in peak demand. Similarly, the impact on voltage fluctuation is analyzed through a case study of the IEEE 33-bus radial distribution test system, which shows voltage profile is improved.