The effect of Demand Response and wind generation on electricity investment and operation

ESRI working papers represent un-refereed work-in-progress by researchers who are solely responsible for the content and any views expressed therein. Any comments on these papers will be welcome and should be sent to the author(s) by email. Papers may be downloaded for personal use only.

December 18, 2017 | ESRI Working Paper

front cover of WP577 Authors: Sheila Nolan , Mel Devine , Muireann Á Lynch , Mark O'Malley

We present a novel method of determining the contribution of load-shifting Demand Response (DR) to energy and reserve markets. We model DR in an Mixed Complementarity Problem (MCP) framework with high levels of wind penetration. Investment, exit and operational decisions are optimised simultaneously. We examine the potential for DR to participate in both energy and reserve markets. DR participation in the energy market reduces costs and prices but the impact of DR participation in reserve markets is limited. DR and wind generation are strongly complementary, due to the ability of DR to mitigate against the variability of wind generation, with the highest impacts of DR seen at high levels of wind penetration. DR participation in the energy market gives rise to lower equilibrium levels of investment in conventional generation and induces a Pareto improvement versus a market with no DR participation. The total impact of DR is highly dependent on specific system characteristics.

© 2015 The Economic and Social Research Institute. All rights reserved. Website by JET Design