Analysis of the TOU Rate Scheme and the Demand Reduction Incentive Scheme in Taiwan

Over the past several years, the Taiwan Power Company has launched two smart pricing programs to assess the demand response of residential customers. Namely, the Time-of-Use (TOU) rate scheme de- signed for smart meter customers and the Demand Reduction Incentive (DRI) scheme for the residential sec- tor are typical examples. This paper discusses these two programs and evaluates their respective perform- ances. Our study adopts two-sample Kolmogorov-Smirnov test to evaluate the appropriateness of current par- titions in the electricity load profiles and develops an efficient approach based on marginal cost pricing to re- design the TOU rate scheme for effective load management. Although the DRI scheme performs well, further improvements in energy saving and carbon reduction is necessary to reach an efficient win-win solution among customers, the utility and society. This can be achieved via a careful design of incentive tariff dis- counts to take account of the time-of-use or location-specific features of the power supply/demand condition.