Payment and Incentive Allocation in Demand Response Based on Cost Causation Principle

Demand response (DR) plays a significant role in facilitating the integration of renewable energy sources (RES) by unlocking the flexibilities of the demand-side resources. However, the fund flows in existing DR programs do not follow the cost causation principle (CCP), and hence fail to offer long-term and substantial DR incentive funds. Therefore, this paper proposes a payment and incentive allocation method for customer directrix load (CDL)-based DR mechanism. First, we conduct a comprehensive survey on the fund flows in existing DR programs and summarize the reasons why they fail to meet CCP requirements. Subsequently, a CCP-based fund flow model in DR programs is proposed. To rapidly and transparently quantify the payment ratios, the concept of effective energy shift is proposed to assess the marginal impact of the potential causers on flexibility demand. Furthermore, a DR incentive allocation method is proposed, where different types of DR customers receive the incentive in proportion to the CDL similarity index without bias. Meanwhile, the scale of DR fund pools is determined through a total social welfare maximization optimal model, which can be swiftly solved by a tailored Bayesian optimization algorithm. Finally, a case study is conducted and the results numerically verify the effectiveness of the proposed method.