Aggregator-induced demand response and bidding strategy for electricity market environment based on Ethereum smart contracts

Abstract

ABSTRACT With the liberalization of the Electricity Market (EM), a secure demand response program (DRP) for real-time decisions is needed to enhance the effectiveness, stability, and security of the EM. Customers play a crucial role in DRP as they can offer flexibility when the market demands it. Nevertheless, the aggregator does not fully understand the customer’s available DR capacity to accurately bid on market transactions. To do so, the article presents a smart contract based on an optimal bidding strategy for an aggregator that considers customer receptiveness. First, we endeavor to determine the customer’s receptiveness concerning various incentives where the home energy management system (HEMS) introduces the employed load adjustment for electrical appliances. Second, the aggregator adopts a rational approach to employing the optimal day-ahead bidding strategy and scheduling for energy storage systems (ESS) to exploit economic benefits. The execution of Ethereum smart contracts in market transactions ensures transparency, security, and superior reliability. A test case with realistic data is presented to demonstrate the usefulness of the proposed bidding strategy. The results confirm that the aggregator determines the optimal bidding value for the next day. An aggregator could generate a profit of $23 from the bidding strategy. The regional transmission system operator delivers 485 kWh of flexibility, of which consumers account for 60% and ESS for 40%, generating a profit of $40 per day. Prosumers selling electricity to the aggregator would make an average profit of $6 per day. Thus, the execution of DRP and a bidding strategy results in economic benefits for the aggregator and other entities in the EM.