Demand Based Electricity Pricing in Bangladesh: in a Deregulated Market Scenario

Abstract

Deregulation in electricity market allows for competition and makes the system economically efficient. In Bangladesh, electricity is centrally controlled and regulated where the electricity prices vary on the type and amount of usage. This study reports the prospect of demand-based electricity pricing in the context of a deregulated electricity market in Bangladesh. The market clearing price is determined from the supply and the demand curve on half hourly basis. To determine the supply curve, the generating power plants capacity are placed in ascending order according to their per unit power generating cost. The demand is considered inelastic and is determined from the daily load curve. The effect of seasonal variation on demand-based electricity price is further analyzed. The demand-based electricity prices are generally found to be lower than the existing prices. Furthermore, generating electricity from the units with least generating cost can save significant amount of cost which can be utilized in transmission and distribution network. The demand-based dynamic price can be useful in implementing demand response in the system.