Demand response for variable renewable energy integration: A proposed approach and its impacts

As electricity systems integrate increasing penetrations of variable renewable energy, system operators are seeking technologies and strategies that increase their system’s flexibility. Despite obstacles around hardware, market structure, and lack of experience, demand response is an important source of flexibility that complements more conventional supply-side flexibility resources. However, accurate representations of demand response in production cost models employed for grid systems analyses have been limited by incomplete formulations, inadequate real-world data, case studies with narrow applicability, and a finite list of end uses and sectors. This paper proposes a suite of demand response constraints that capture more-realistic demand response operational limitations including uptimes and downtimes, numbers of starts per day, allowable power limits, and required recovery periods. The proposed demand response implementation is tested with real-world load data for Bangalore, India. The results show that demand response reduces production costs primarily by facilitating the substitution of high-marginal-cost thermal generators with near-zero-marginal-cost renewables. Overall, demand response utilization rates are most constrained by their maximum allowable daily deployment, but intraday recovery constraints govern their operational behavior. In addition to the significant value that demand response provides to the grid, demand response aggregators can expect substantial revenues from price arbitrage.