Impact of Incentive Based Demand Response on large scale renewable integration

Abstract

The large scale deployment of renewable generation is generally seen as the most promising option for displacing fossil fuel generators, especially coal-fired power plants. A key challenge in integrating Renewable Energy Resources (RERs) is to find approaches that ensure long term sustainability and economic profit. One approach for mitigating the variability issue of integrating RERs is Demand Response (DR). The majority of current research is focuses on the role of DR for reliability support while economic concerns of RERs are barely addressed. In this paper, we investigate how DR can provide a potential solution to improve economic integration of RERs. More specifically, we propose Incentive Based DR (IBDR) programs, which is generally more attractive than real-time pricing programs for small customers. The proposed optimization framework in this paper finds an adequate amount of load change and incentive payments at each hour using a behavior model of customers. For this case study, the retirement of seven coal-fired power plants and expansion of RERs from less than 5% to 30%, is simulated for one year using data in the reduced WECC 240-bus system. Results show although renewable expansion could lead to benefit loss for utilities and sharp changes in market price, the proposed IBDR program could minimize these impacts.