Humans heavily rely on energy consumption in their current lifestyle, making it an inevitable necessity. The increasing energy demand has led to an imbalance between supply and demand. Traditional energy sources, the primary suppliers, continuously deplete and create significant environmental concerns. Developing nations struggle with an aging, unstable, and impractical power structure, exacerbating the issue. Moreover, the existing electricity grid is unstable, prone to blackouts, suffers from high transmission losses, and fails to meet the electricity demand adequately. This setup also discourages the integration of distributed energy sources, less profit for consumers, and load-serving entities. To address these issues, this paper introduces a pioneering initiative known as the coupon incentive-based demand response (C-IBDR) program within the context of an energy market. In this approach, the LSE seeks to maximize profits, while consumers are incentivized to curtail their energy consumption with specific price incentives and profit optimization as their primary objectives. Independent service providers (ISO/RTO) are profit-seeking entities aiming to minimize costs. The C-IBDR program is designed to harmonize the interests of all entities, encompassing a diverse range of consumer categories, including industrial, commercial, and residential. Importantly, it delves into the consumer utility, adding a layer of complexity to the analysis. Furthermore, the assessment extends its scope to encompass the evaluation of social welfare, thereby providing a comprehensive perspective on the profitability of all stakeholders involved. The proposed approach with renewable energy incorporation is also tested on the PJM 5-bus system to validate the program’s efficacy. All models are formulated and solved using MATLAB. The results obtained from this comprehensive evaluation demonstrate the practical effectiveness and viability of the proposed C-IBDR approach, both in terms of validation and real-world implementation.
