Optimal Demand Response Aggregation In

Wholesale Electricity Markets

Jose Miguel Glvez Gajardo-Cristin Ernesto Toro Lpez

ABSTRACT
This paper proposes an economic dispatch
model in micro grids coupled to the network
with high NCRE penetration. The principal
aim is to minimize the total costs of the
system that are those related to the
operation and storage. The optimal
scheduling strategy minimizes the micro grid
operational net cost, which includes
distributed generation and distributed
storage. The approach involves the actual
renewable energy as well as the energy is
traded with the main grid.

INTRODUCTION
The DR (Demand Response) aggregation is acknowledged as an efficient solution to increasing the exposure of large volumes of
consumers to wholesale electricity markets. In this regard, DR aggregators participate in electricity markets as a medium between the ISO
(Independent System Operator) and retail customers. DR aggregators work with retail customers to identify and offer appropriate DR
programs that would allow customers to participate in the ISOs market clearing program. The aggregators work with load serving entities
(LSEs) to provide customers with advanced metering data for the monitoring and control of real-time electricity consumption.
Our study in this paper will develop a model for decision-making by DR aggregators in wholesale electricity markets. We consider an allencompassing DR aggregator in this paper with all possible DR options for participating in the day-ahead market. The four load reduction
strategies are described below.

MODELS
In the LC strategy, customers reduce their total electricity usage in
In the LS strategy, customers reschedule and shift their electricity
the DR scheduled program without shifting the designated load to
usage to other hours.
any other time period.

Load
Curtailment

Load Shifting

Utilizing Onsite
Generation

Utilizing ES
System

CONCLUSIONS
1) DR aggregation would reduce the number of DR data passed
onto the ISO.
2) Physical constraints can affect the optimal DR offer and the
payoff of DR aggregators in day-ahead energy markets.
These issues would highlight the importance of a precise
aggregation model for customer load reductions.
3) The hourly DR aggregation offers the optimal scheduling of
supply, which could maximize aggregator payoffs.
4) LC contracts are mostly constrained by minimum and
maximum durations of load curtailments. The maximum
number of daily load curtailments also becomes an important
factor when hourly market prices exhibit multiple spikes during
a day.
5) The LS contract is more applicable from a customers point
of view than LC as load is not curtailed in LS and the total
energy consumed remains unchanged.
6) The scheduled OG contracts are mainly limited by the
availability of fuel. The startup cost of generation could also
play an important role in certain cases.
7) The load reduction provided through ES contracts is
technically more flexible comparing to other strategies. The
limiting parameters are the rated power and energy capacity
as well as energy retention time of ES fleets.

In the OG strategy, customers reduce their load by turning on an

onsite or backup generator to supply some or all of their own
electricity loads.

In the ES system strategy, customers utilize their ES system to

supply some or all of their electricity needs during the DR program.

Objective Function