Consumer price sensitivity impact on tariff level in isolated rural power systems

Abstract

Uncertainties in demand and supply are among the challenging aspects when planning isolated power systems as well as one of the reasons why plans are not as optimal as expected. Most consumers in these areas are price sensitive and their sensitivity may change over time. To be able to estimate the outcome of certain investments in such markets with uncertainties, it is important to have a realistic modelling of the market. The modelling of markets can be performed using probability methods. This paper presents a methodology using Monte Carlo simulation to analyze the impact of price sensitivity of consumers on the probability distribution of tariff as a basis for making decision during planning. The stochastic nature of the market due to uncertainties in sensitivity, demand and supply has been modelled explicitly by random variables of given distributions. The developed model has been demonstrated on a small test system. The results include probability distributions showing the impact on the tariff levels for various system configurations.