Pricing Mechanisms versus Non-Pricing Mechanisms for Demand Side Management in Microgrids

In this paper, we compare pricing and non-pricing mechanisms for implementing demand-side management (DSM) in a neighborhood in Helsinki, Finland. Specifically, we analyze load steering based on peak load reduction using the profile steering method, and load steering driven by market price signals, evaluating both approaches in terms of peak loads, losses, and device profiles. Our findings reveal significant differences between the two methods: peak-load reduction control strategies contribute to lowering peak power and enhancing power flow stability, while price-driven strategies tend to result in higher peaks and increased grid losses. These results highlight the potential need to shift from market-price-based DSM towards DSM strategies that prioritize peak load reductions and other system requirements.