Electricity demand response schemes in China: Pilot study and future outlook

Abstract

Electricity demand response (DR) improves the overall energy management efficiency and allows for the integration of large-scale renewable energy into the power grid through interactive management and control of the supply and demand sides. However, in China and other emerging countries (e.g., Japan and Australia) with DR programs, the DR market mechanism is not well-established. This is particularly the situation in countries where the state power system is not freely open to participate in the DR market. Previous research has proven that considerable DR resources are largely existing in the demand side; however, the dearth of a market mechanism hinders the development of DR. Hence, a feasible market mechanism is urgently required. In this study, first, the experiences in existing DR-developed markets where DR has been legally regarded as an equivalent electricity resource are investigated. Second, a pilot DR program in Shanghai representing emerging DR markets with a non-liberated electricity background is presented. Moreover, two market mechanisms are analyzed: the energy efficiency obligation mode and the electricity capacity trading mode. Finally, five feasible DR mechanisms—mandatory energy-saving, cap and trade, DR-tiered electricity tariff, price-based program, and economic and emergency DR—are proposed for China and other DR emerging countries.