Financially, DRs reduces the electricity price. From Table 3, the percent of peak demand shaving 6.6%.

Translating this percent into saved money is out of the scope of this paper, this would be reserved to
quantification studies. To give an idea, one study by the Brattle Group quantified the value of demand
response, and it was estimated that less than 2% load curtailment in PJM’ s market would reduce energy
market prices between $8 and $25 per megawatt hour, or 5– 8% on average, depending on market
conditions. Which is a significant saving alongside other non-financial benefits [1].

Another study of the Price-Effect of Demand Response on the Iberian Market showed that a small amount
of load reduction of 5% resulted in 76.62 million euros [2].

2.9 Barriers to DR and future improvements:

Despite the promising results of different DR programs worldwide, their implementation is limited. The
main reason for that is the cost of initial investment in necessary equipment to integrate the programs. While
this financial burden may be bearable by large customers, small ones won’t be able to afford it. For example,
a metal industry company called Alcoa had to invest $750,000 between the telemetry infrastructure, the
EMS, the bidding interface and the database system to participate in DR program in MISO [6].

To overcome this burden, I think policymakers should intervene to encourage the development of new
affordable DR technology and /or subsidize the existing one. Governments should also encourage
widespread deployment of DR in collaboration with the electricity providers.

Another barrier to make attract consumers to participate in DR programs is the uncertainty surrounding the
financial gains from the DR programs. For instance, only 23% of customers enrolled in the available DR
programs in the U.S. in 2012 [6]. The rewards must exceed the inconvenience that is associated with load
curtailment for customers to participate in DRs. To remove this barrier, electricity providers should apply
robust analytical approaches to implement win-win DR programs.

3 Participation of ESS in Electricity Market :

3.1 Energy arbitrage:
Energy arbitrage consists of buying electricity from the wholesale market when the price is low and selling
it back when the price is high. This is would be profitable only if the return on investment is covered from
the profit made from the difference between the purchase and resale of the stored electricity energy.

As an example, in [10] an estimation has been made to calculate the revenue of a 1 MW storage system.
The calculations gave an annual value ranging from €25k/MW (1 h of discharge) to €75k/MW (7 h of
discharge), for a revenue at 8% over 10 years of €170k–500k/MW which is not attractive.

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