On Peak Shaving and Load Shifting in Distribution Systems: Cost Saving vs Peak Load Reduction

Optimal peak shaving and load shifting on distribution feeders have various objective settings, e.g., saving energy costs, lowering peak load, narrowing peak-valley load difference, etc. Since these settings result in different reshaped load profiles, there may exist conflict between energy cost saving and peak load reduction. This paper mathematically elaborates the impacts of objective settings by deriving the closed-form solutions of several simplified optimization programs. The results reveal that any one-sided (or “skewed”) settings may lead to either undesired peak load or poor cost savings if the peaks of price and load do not coincide. Further, we propose a novel mathematically manipulated objective function and prove it can better balance the cost reduction and peak shaving.