Journal
IEEE TRANSACTIONS ON SMART GRID
Volume 10, Issue 3, Pages 3282-3291Publisher
IEEE-INST ELECTRICAL ELECTRONICS ENGINEERS INC
DOI: 10.1109/TSG.2018.2822778
Keywords
Demand response; revenue adequacy; economic dispatch; electricity markets; locational marginal price
Categories
Funding
- National Science Foundation [ECCS-1546682, CCF-1331863]
- Division of Computing and Communication Foundations
- Direct For Computer & Info Scie & Enginr [1331863] Funding Source: National Science Foundation
- Div Of Electrical, Commun & Cyber Sys
- Directorate For Engineering [1546682] Funding Source: National Science Foundation
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This paper critically assesses the issue of revenue inadequacy due to the presence of standalone demand response providers (DRPs) in day-ahead wholesale electricity markets. Given the increasing penetration of renewable resources such as wind and solar, demand response offers a potential tool for mitigating their uncertainties. We find that if standalone DRPs are treated as virtual generators, there will be revenue inadequacy in the wholesale electricity market. In this paper, through a conceptual example we examine the economic model of DRPs in the wholesale electricity market. A potential two-step solution to the revenue inadequacy problem is proposed, which comprises of modified locational marginal prices and optional transfer payments between the load serving entities and DRPs. Two simple numerical examples are provided with the purpose of illustrating our proposed approach for the design of electricity markets with standalone DRPs.
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