Integrating Net Benefits Test for Demand Response Into Optimal Power Flow Formulation

Abstract

In 2011, the Federal Energy Regulatory Commission (FERC) mandated that demand response (DR) procurement pass a net benefits test (NBT) in Order 745 to ensure that the benefits outweighed the costs. Without NBT, DR procurement could result in losses to consumers considering payments for energy and DR services. Current NBT implementations are monthly. However, this neglects to consider two important issues: (a) generator supply curve and demand changes on an hourly basis thus altering the maximum DR quantity that can be dispatched considering NBT; and (b) system-wide implementations don't consider locational marginal prices, line flow limits, and network congestion. Both of these issues can severely distort proper implementation of the NBT. However, FERC allowed the NBT be applied monthly and system-wide in recognition of computational difficulties and lack of methods, and FERC called for research in real-time implementations of NBT. Our work responds to this call. To address these two shortcomings, we propose a new optimal power flow (OPF) formulation in which NBT is implemented into a real-time or near real-time dispatch OPF model and considers the network model in its entirety. Our proposed methodology is applied to a 4-bus test system, a 118-bus modified IEEE system, and a real Ontario system. We demonstrate that the embedding of NBT into real-time OPF formulation yields maximum benefits to remaining consumers when compared to conventional DR formulations.