IDEAS home Printed from https://ideas.repec.org/p/foi/msapwp/05_2014.html
   My bibliography  Save this paper

Market Design for Rapid Demand Response - The Case of Kenya

Author

Listed:
  • Kurt Nielsen

    () (Department of Food and Resource Economics, University of Copenhagen)

  • Tseganesh Wubale Tamirat

    () (Department of Food and Resource Economics, University of Copenhagen)

Abstract

We suggest a market design for rapid demand response in electricity markets. The solution consists of remotely controlled switches, meters, forecasting models as well as a flexible auction market to set prices and select endusers job by job. The auction market motivates truth-telling and makes it simple to involve the endusers in advance and to activate demand response immediately. The collective solution is analyzed and economic simulations are conducted for the case of Kenya. Kenya has been su ering from unreliable electricity supply for many years and companies and households have learned to adjust by investments in backup generators. We focus on turning the many private backup generators into a demand response system. The economic simulation focuses on possible distortion introduced by various ways of splitting the generated surplus from the demand response system. An auction run instantly as the Transmission System Operator (TSO) requests demand response and the winning endusers are disconnected immediately if the TSO accepts the result of the auction. The endusers are compensated with a uniform auction price job by job and the Aggregator receives part of the surplus. The simulation captures the nature of the demand response system and reveals that a simple markup contract between the Aggregator and the TSO is sufficiently flexible and little distorting. The simulation also provide a the less intuitive result, that the auction motivates the TSO to o er a high markup contract to the Aggregator to motivate a large pool of demand response. We discuss how this may motivate the alternative owner structure where the Aggregator is a cooperative owned by the endusers themselves.

Suggested Citation

  • Kurt Nielsen & Tseganesh Wubale Tamirat, 2014. "Market Design for Rapid Demand Response - The Case of Kenya," MSAP Working Paper Series 05_2014, University of Copenhagen, Department of Food and Resource Economics.
  • Handle: RePEc:foi:msapwp:05_2014
    as

    Download full text from publisher

    File URL: http://okonomi.foi.dk/workingpapers/MSAPpdf/MSAP2014/MSAP_WP05_2014.pdf
    Download Restriction: no

    More about this item

    Keywords

    : Demand response; auction market; contracts; simulation;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:foi:msapwp:05_2014. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Geir Tveit). General contact details of provider: http://edirc.repec.org/data/msakudk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.