Demand response: Social welfare maximisation in an unbundled energy market - case study for the low-voltage networks of a distribution network operator in the Netherlands

Abstract

With the introduction of smart meters, dynamic pricing and home energy management systems, residential customers are able to react to changes in electricity prices. In an unbundled market, the energy supplier and the network operator may have conflicting interests with respect to demand response (DR) programs. As the customer participation is essential to a well-functioning DR program, it is needed to assess which DR programs offers the most benefits to customers. Two DR program options are analysed for low-voltage feeders: a program from the energy supplier based on the electricity price, and a demand response program from the network operator based on the loading of the network. Depending on the grid topology the benefits can change significantly between the two DR programs. DR from an energy supplier point of view might induce under-voltages which lead to grid reinforcements, while load shifting from a network point of view can generate higher electricity cost.