A new and separated market for demand response in restructured power systems

Abstract

This paper introduces a new and separated market for the trading of Demand Response (DR) in a restructured power system. This market is called Demand Response eXchange or shortly DRX, in which DR is treated as a virtual resource to be exchanged between DR buyers and sellers. Buyers — including the Transmission System Operator (TSO), distributors, and retailers — need DR to improve the efficiency and reliability of their own businesses and systems. Sellers — including consumers though an aggregator — negotiate DR with those buyers. The DRX is modeled in the form of a pool-based market using microeconomic theory. In this market, a DRX Operator (DRXO) collects bids and offers from DR buyers and sellers respectively. It then clears the market by maximizing the total market benefit subject to certain operational constraints. The DRX model is also tested on a small power system in comparison to conventional DR approaches, and its advantages are reported.