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Impact of Dynamic Prices on Distribution Grid Power Quality



David Holmberg, Thomas Roth, Farhad Omar


Dynamic price signals may provide a way to support integration of customer distributed energy resources (DER) into the electric grid and to help manage DER flexibility to support distribution system and bulk grid needs. Use of DER flexibility includes peak shifting in response to forward market prices, real-time regulation in response to 5-minute prices, and, potentially, voltage regulation in response to distribution nodal prices. The work presented here compares two approaches for managing heat pump cooling to provide grid services. The first approach implements a rule-based real-time controller that manages power consumption based on 5-minute real-time prices. The second controller uses a building model-based approach to optimize load based on day-ahead hourly prices. These approaches are evaluated in GridLAB-D simulations. Simulation results show both controllers adjusting temperature setpoints in response to price movement, reducing customer cost while staying within pre-defined comfort boundaries. These temperature adjustments resulted in significant power flow volatility at the substation. The average power flow change for the real-time controller, time step to time step, was approximately 10 % of the peak load. Some observed power flow changes were equivalent to simultaneously turning off or on all price-responsive loads on the grid. This power flow volatility resulted in voltage volatility at customer meters and greatly increased voltage regulator and capacitor bank actions. Analysis suggests that power flow volatility may be expected when many devices are price-responsive and controllers have the goal of reducing cost without considering voltage. Care must be taken to reduce the volatility of the price signal and boost hosting capacity to support synchronized price response by a large percentage of load.
Technical Note (NIST TN) - 2261
Report Number


distribution grid, dynamic pricing, GridLAB-D, hosting capacity, power quality, volatility


Holmberg, D. , Roth, T. and Omar, F. (2023), Impact of Dynamic Prices on Distribution Grid Power Quality, Technical Note (NIST TN), National Institute of Standards and Technology, Gaithersburg, MD, [online],, (Accessed April 18, 2024)
Created August 16, 2023