System and Private Values of Demand Response: Insights for Mass Deployment

Demand response is advertised by regulators, system planners, and the industry as a crucial flexibility resource for the next decade in increasingly renewable-based power systems. As of today, most demand response potentials remain untapped, notably in the diffuse residential and tertiary sectors. A massive deployment effort seems bound to happen. This paper provides insights into the values of numerous demand response potentials from the different perspectives of system planners and operators, private market actors, and consumers. To do so, a large-scale SDDP-solved bottom-up demand response model is developed and calibrated on a plausible 2035 French power system. This unique yet agile valuation framework provides insights into operation-related values of demand response, such as the system's cost or emissions reductions, and investment-related ones, such as peak generation investment deferral or mitigated renewable capacity increase. Evaluated demand response potentials originate from all types of appliances, primarily focusing on residential and tertiary sectors. Thus, multiple merit orders for demand response are obtained, depending on the merit criterion. Divergences and convergences between these merit orders enrich stakeholders' vision on which potentials should be invested first, which are riskier, and where to target eventual supports.