Real time pricing for electricity and carbon of smart grid considering demand side energy management

Abstract For pursuing carbon neutrality, it is necessary to study carbon reduction mechanisms of the power system, which is the main source of carbon emissions in the energy sector. Noting that the demand of electricity is a potential driver of carbon emissions, carbon trading is migrated to the demand side for reducing carbon, and demand side management strategies with real time pricing are extended from electricity to carbon quotas among users. Inspired by the high carbon emissions caused by industrial users’ huge electricity consumption, real time pricing strategies of electricity and carbon are considered to guide industrial users’ energy consumption. A customized utility function for industrial users is constructed and the carbon elimination cost is quantified for establishing a real time pricing model with social welfare maximization. Considering the actual background and the separable characteristics of variables, a distributed pricing algorithm is designed. Numerical simulation shows that the proposed energy management strategy of coupling electricity price and carbon price is feasible, scientific and reasonable. Comparisons with the fixed carbon price and carbon tax also show that the real time carbon pricing strategy can take advantage of the flexibility for demand side, which can not only improve social welfare but also reduce unnecessary carbon emissions.