Abstract
This paper reviews the state of the art of research and industry practice on demand response and the new methodology of transactive energy. Demand response programs incentivize consumers to align their demand with power supply conditions, enhancing power system reliability and economic operation. The design of demand response programs, performance of pilot projects and programs, consumer behaviors, and barriers are discussed. Transactive energy is a variant and a generalized form of demand response in that it manages both the supply and demand sides. It is intended for a changing environment with an increasing number of distributed resources and intelligent devices. It utilizes the flexibility of various generation/load resources to maintain a dynamic balance of supply and demand. These distributed resources are controlled by their owners. However, the design of transaction mechanisms should align the individual behaviors with the interests of the entire system. Transactive energy features real-time, autonomous, and decentralized decision making. The transition from demand response to transactive energy is also discussed.
Highlights
1.1 What is demand responseDemand response is defined by the U.S Federal Energy Regulatory Commission as follows [1].Changes in electric usage by end-use customers from their normal consumption patterns in response to changes in the price of electricity over time, or to incentive payments designed to induce lower electricity use at times of high wholesale market prices or when system reliability is jeopardized.Demand response contributes to the economy and reliability of a power system
A popular form is direct load control (DLC), in which customers receive incentives and allow power companies to control some of their loads at certain times
A transactive energy scheme is envisioned by Pacific Northwest National Laboratory (PNNL) [46], where individual loads communicate with neighborhoods and determine respective energy consumption schedules in order to smooth their aggregate load curves
Summary
Demand response is defined by the U.S Federal Energy Regulatory Commission as follows [1]. Demand response programs can be categorized into incentive-based and price-based programs. They differ in what drives customers to change their consumption behaviors, i.e., incentive payments or time-varying prices. A popular form is direct load control (DLC), in which customers receive incentives and allow power companies to control some of their loads at certain times. They gain popularity as a result of installation of the smart meter technology [3]. Traditional meters accumulate energy usage over time, and customers are billed typically on a monthly basis. Smart meters can record energy usage on a more frequent basis, e.g., every 10 minutes, making time-varying pricing tariffs feasible
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