Abstract
Interest in Demand Response (DR) is increasing due to its potential to improve reliability and save costs for electricity systems. DR can provide a sustainable and cost-effective option for supply balancing, especially in a scenario with more volatile inflows from renewable energy sources. End-users can be incentivized to provide DR through time-based pricing in general and dynamic pricing in particular. This paper provides a theoretic framework and practice-oriented review of the status of DR in Europe, outlining the major challenges currently hampering further DR development. Important challenges involve the split-incentive issue for investments in enabling technologies, traditional market rules for flexibility that favor large generation units and the need for electricity market and network operation coordination.
Highlights
Increasing penetration levels of intermittent renewable energy sources (RES) in power systems are imposing new challenges for policy makers and regulators
Customers contracted with Voltalis receive a free device installed in their home, named Bluepod, which reduces heating operations in short time intervals when Voltalis receives a signal from the TSO based on endangered electricity supply sufficiency
This paper provided both a theoretical and practice-oriented overview of time-based and dynamic pricing to incentivize demand response for different electricity flexibility needs
Summary
Increasing penetration levels of intermittent renewable energy sources (RES) in power systems are imposing new challenges for policy makers and regulators. After the passing of the Public Utilities Regulatory Policy Act (PURPA) in the early 1980s, measures designed to reduce demand peaks were set forth via the promotion of load-management programs Those involved both direct-control and price-based programs for large industrial users (DOE, 2006). In Europe, large industrial customers provide demand response flexibility for balancing purposes in real-time system operation. The literature on time-based pricing focuses on demand response to serve the objectives of electricity supply (Nieto, 2012), balancing (Koliou et al, 2014), and network purposes (Bartusch and Alvehag, 2014).
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