A Methodological Framework for Designing Dynamic Heat Price for Demand Response in District Heating

Currently, the price per consumption of most district heating consumers is static, providing no incentive for consumers to change their heating behavior. A dynamic pricing structure can encourage consumers to adjust their heat demand according to supply conditions. This paper presents a methodology for designing day-ahead dynamic price profiles for district heating to encourage buildings for certain demand response purposes effectively. This method relies on a method to characterize the energy flexibility of buildings and an inverse optimization to obtain the optimal dynamic price profile. The methodology is tested on a residential neighborhood as a case study, using a virtual experiment that includes buildings and a district heating network. Results show that the designed dynamic price could encourage consumers to change their demand profile to match a pre-defined load-shifting profile with 16.6% MAPE. Accordingly, the peak load was reduced by 84.4% as a result of responding to a tailored price profile, considering the flexibility potential of the neighborhood. In addition, heat costs in the neighborhood were reduced by 46.6% compared to the flat price. The findings of this paper highlight the benefits of the dynamic heat price for district heating operators and consumers over the flat price.