Profit-Oriented demand response optimization in distribution Systems: Balancing incentives and asset lifespan

Overloading is a common challenge in distribution networks, where assets, despite a typical 25% overload capacity, frequently operate beyond their limits during peak demand. This condition accelerates asset degradation through elevated temperatures and increased failure rates, ultimately leading to a higher incidence of power outages. This study develops a comprehensive framework to evaluate the impact of Demand Response (DR) programs on distribution systems. The framework first quantifies the economic damage from cable lifespan reduction due to overloading. Second, it models the financial implications of increased outage statistics. Finally, it optimizes an economic DR strategy for peak shaving and damage reduction. Applying the model to a case study of the Greater Tehran Distribution Company, the results confirm that DR-driven load reduction effectively mitigates cable aging and significantly reduces outage-related costs.