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Which electricity market design to encourage the development of demand response?

Author

Listed:
  • Vincent Rious

    (E3S - Supélec Sciences des Systèmes [Gif-sur-Yvette] - SUPELEC)

  • Yannick Perez

    () (LGI - Laboratoire Génie Industriel - EA 2606 - CentraleSupélec, RITM - Réseaux Innovation Territoires et Mondialisation - UP11 - Université Paris-Sud - Paris 11)

  • Fabien Roques

    () (LESIA - Laboratoire d'études spatiales et d'instrumentation en astrophysique - UPMC - Université Pierre et Marie Curie - Paris 6 - INSU - CNRS - Institut national des sciences de l'Univers - Observatoire de Paris - UPD7 - Université Paris Diderot - Paris 7 - CNRS - Centre National de la Recherche Scientifique)

Abstract

Demand response is a cornerstone problem in electricity markets under climate change constraints. Most liberalized electricity markets have a poor track record at encouraging the deployment of smart meters and the development of demand response. In Europe, different models are considered for demand response, from a development under a regulated regime to a development under competitive perspectives. In this paper focusing on demand response and smart metering for mid-­‐size and small consumers, we investigate which types of market signals should be sent to demand managers to see demand response emerge as a competitive activity. Using data from the French power system over nine years , we compare the possible market design options which would enable the development of demand response. Our simulations demonstrate that under the current market rules demand response is not a profitable activity in the French electricity industry. Introducing a capacity market could bring additional revenues to demand response providers and improve incentives to put in place demand response programs in a market environment.

Suggested Citation

  • Vincent Rious & Yannick Perez & Fabien Roques, 2015. "Which electricity market design to encourage the development of demand response?," Post-Print hal-01286331, HAL.
  • Handle: RePEc:hal:journl:hal-01286331
    DOI: 10.1016/j.eap.2015.11.006
    Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01286331
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    References listed on IDEAS

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    Cited by:

    1. Claire Bergaentzlé & Cédric Clastres & Haikel Khalfallah, 2014. "Demand-side management and European environmental and energy goals: an optimal complementary approach," Post-Print halshs-00928678, HAL.
    2. repec:eee:eneeco:v:64:y:2017:i:c:p:638-650 is not listed on IDEAS
    3. Claire Bergaentzlé & Cédric Clastres, 2013. "Demand side management in an integrated electricity market: what are the impacts on generation and environmental concerns ?," Post-Print halshs-00839116, HAL.
    4. Reihani, Ehsan & Motalleb, Mahdi & Thornton, Matsu & Ghorbani, Reza, 2016. "A novel approach using flexible scheduling and aggregation to optimize demand response in the developing interactive grid market architecture," Applied Energy, Elsevier, vol. 183(C), pages 445-455.
    5. repec:eee:appene:v:202:y:2017:i:c:p:125-137 is not listed on IDEAS
    6. Claire Bergaentzlé & Cédric Clastres, 2013. "Tarifications dynamiques et efficacité énergétique : l'apport des Smart Grids," Post-Print halshs-00822731, HAL.
    7. Després, Jacques & Mima, Silvana & Kitous, Alban & Criqui, Patrick & Hadjsaid, Nouredine & Noirot, Isabelle, 2017. "Storage as a flexibility option in power systems with high shares of variable renewable energy sources: a POLES-based analysis," Energy Economics, Elsevier, vol. 64(C), pages 638-650.
    8. Bublitz, Andreas & Keles, Dogan & Zimmermann, Florian & Fraunholz, Christoph & Fichtner, Wolf, 2018. "A survey on electricity market design: Insights from theory and real-world implementations of capacity remuneration mechanisms," Working Paper Series in Production and Energy 27, Karlsruhe Institute of Technology (KIT), Institute for Industrial Production (IIP).
    9. Bergaentzlé, Claire & Clastres, Cédric & Khalfallah, Haikel, 2014. "Demand-side management and European environmental and energy goals: An optimal complementary approach," Energy Policy, Elsevier, vol. 67(C), pages 858-869.
    10. repec:gam:jeners:v:11:y:2018:i:4:p:713-:d:137473 is not listed on IDEAS

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    Keywords

    Market Design; Demand Response; Capacity Market;

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