Analytical solution for demand contracting with forecasting‐error analysis on maximum demands and prices

This study presents a new analytical solution to solve the contracting capacity (CC) optimisation problem that several sets of the demand and energy rates are available in the market. The proposed method (PM) obtains the best option for the prices and the best CC. It is mathematically proved that the best CC is the maximum demand for a specific month of interest. Further, despite most existing methods such as linear programming, PM is able to obtain all optima. Some significant properties of and the influence of the input parameters on the optimal solution are discussed. Moreover, the errors on the forecasted maximum demand and the forecasted prices are separately analysed. Finally, the PM is performed on the data of various scenarios of a large real electrical user to highlight the effectiveness of this method.