Demand-side management (DSM) programs in the industrial sector appear to be economically feasible due to the large controllable loads and relatively low costs per control point. Innovative electricity tariffs provide one of the most important DSM alternatives. Because real-time pricing (RTP) is considered as an excellent management option which reflects the real cost of generating electricity to the end user, the electricity cost saving potential of RTP through demand management is presented in this paper. A unique analytical approach is followed to describe the potential electricity cost savings mathematically in terms of variables familiar to both the end user and utility. These variables include the installed power consumption capacity of the plant, the plant’s spare energy consumption capacity, and terms that describe the structure of the RTP tariff.
