Demand response for domestic and small business consumers: A new challenge

Abstract

There is a need to integrate Demand Response (DR) into the management of the electricity market and power system within both planning and operational timescales. This paper reviews some issues of DR for domestic and small business consumers, in both the United States and Australian contexts. The advantages and limitations of two types of DR, namely reliability-based DR and price-based DR are discussed through examining related studies. The paper claims that neither price-based DR nor reliability-based DR can maximize the DR benefit if applied alone in a deregulated environment. In particular, a reliability-based program unfortunately achieves the lowest level of benefits since it only addresses short-term market conditions rather than the long-term impacts. A price-based program considering long-term benefits may sometimes incur short-term financial losses due to price spikes caused by unplanned network outages or shortfalls of intermittent power supply. The paper finally suggests a new hybrid framework, in which both price-based and reliability-based programs are able to cooperate with each other through an information management system within both planning and operational timescales.