Abstract
The active participation of demand response (DR) resources into the wholesale market price formation and load dispatch process has the potential to stimulate demand-side flexibility. However, it is challenging for a market entity to utilize the DR resources for practical use. This is because day-ahead wholesale market-clearing prices are uncertain, and DR resources are heterogeneous. Furthermore, DR participation may lead to violations of the distribution system’s operational constraints. In this article, we propose an approach for an aggregator/load-serving entity (LSE) to profitably bid aggregated DR resources into the day-ahead wholesale market. The LSE requires an optimal bidding strategy that reflects the price elasticity of the aggregated retail loads to participate in the wholesale market operations. In the proposed approach, the LSE executes load curtailment and load shifting contracts with DR resources, where DR resources are remunerated for their participation at pre-contracted incentive prices. Then, the LSE aggregates the DR flexibility and optimally bids it in the day-ahead wholesale market. The proposed approach is validated using the IEEE-123-bus test system. It is demonstrated that the LSE can successfully generate economic bids for its participation in the day-ahead market by optimal management of DR resources and without violating the network’s operating constraints.
Highlights
T HE rapidly transforming electric power grid is facing unprecedented challenges due to uncertain demand and supply imbalances resulting from misaligned infrastructure and high aggregate peak time usage
It is impractical to expect active market participation from individual customers. This motivates the concept of demand response (DR) aggregators or profit-seeking load-serving entities (LSEs) who participate on behalf of DR resources
Harnessing the demand-side flexibility of a large number of demand response (DR) resources calls for novel mechanisms for their aggregation and bidding into the wholesale market while holistically considering the associated economic and engineering concerns
Summary
T HE rapidly transforming electric power grid is facing unprecedented challenges due to uncertain demand and supply imbalances resulting from misaligned infrastructure and high aggregate peak time usage. Considering this issue, the power systems community has widely recognized the value of demand response (DR) resources in improving the operational efficiency of the emerging power grid. It is impractical to expect active market participation from individual customers This motivates the concept of DR aggregators or profit-seeking load-serving entities (LSEs) who participate on behalf of DR resources. To participate in the wholesale market, LSEs require an optimal bidding strategy that reflects the price elasticity of the aggregated retail loads
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