Reliability-based nodal evaluation and prioritization of demand response programs Amir Moshari * ,† and Akbar Ebrahimi Department of Electrical and Computer Engineering, Isfahan University of Technology, Isfahan 84156, Iran SUMMARY Demand response (DR) programs are effective tools to relieve power systems operational risks and will play key role in future smart grids because of emerging advanced communication and metering technologies. En- hancing power system reliability is one of the main goals of employing DR programs. This paper presents a nodal viewpoint for reliability-based planning of DR programs. It aims to demonstrate the superiority of nodal evaluation and prioritization of DR programs to improve reliability over the global approach. Here, a sequential state-enumeration-based method is presented for composite system operational reliability as- sessment, and a multi-segment optimal power flow approach is developed to evaluate the effects of DR pro- grams. In addition, analytic hierarchy process is employed for global and nodal prioritizing of different DR programs. The results show that employing DR programs based on nodal prioritization can lead to higher reliability, lower costs, and greater assurance on programs implementation. Copyright © 2014 John Wiley & Sons, Ltd. key words: AHP; DR programs; multi-segment OPF; prioritization; short-term reliability assessment; smart grid 1. INTRODUCTION The International Energy Agency strategic plan for demand-side management programs (2004–2009) states that, “demand side activities should be active elements and the first choice in all energy policy decisions designed to create more reliable and more sustainable energy systems” [1]. Because of indus- trial load growth and increases in population, electricity demand continues to increase throughout the world. However, the main problem is the grid capacity limitation, which significantly increases the necessary investments. On the other hand, power utilities are faced with increasing environmental con- cerns and constraints. Demand-side management (DSM) programs are one of the efficient solutions to alleviate these problems and limitations [2,3]. It is the main advantage of DSM programs that their employing is less expensive than building new power plants or installing electric storage devices [4]. In recent years, DSM programs have been changing from utility-oriented programs into consumer- oriented or demand response programs. Demand response is defined as changes in electric usage by end-use consumers from their normal consumption patterns in re- sponse to changes in the price of electricity over time, or to incentive payments designed to in- duce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized [5]. Therefore, enhancing reliability is one of the main goals of demand response (DR) programs. On the other hand, by emerging the smart grids, DR programs will be widely employed because of their great *Correspondence to: Amir Moshari, Department of Electrical and Computer Engineering, Isfahan University of Technology, Isfahan 84156, Iran. † E-mail: a.moshari@ec.iut.ac.ir Copyright © 2014 John Wiley & Sons, Ltd. INTERNATIONAL TRANSACTIONS ON ELECTRICAL ENERGY SYSTEMS Int. Trans. Electr. Energ. Syst. (2014) Published online in Wiley Online Library (wileyonlinelibrary.com). DOI: 10.1002/etep.2041