Evaluating demand side measures in simulation models for the power market

Increased energy efficiency is one of the pillars for reducing CO2 emissions. However, in models for the electricity market like unit commitment and dispatch models, increased efficiency of demand results in a paradoxical apparent reduction of the total economic surplus. The reason is that these are partial models for the electricity market, which do not take into account the effect of the changes in other markets. This paper shows how the calculation of the consumer surplus in the electricity market should be corrected to take into account the effect in other markets. In different cases we study shifts in the demand curve that are caused by increased energy efficiency, reduced cost for substitutes to electricity and real-time monitoring of demand, and we derive the necessary correction. The correction can easily be included in existing simulation models, and makes it possible to assess the effect of changes in demand on economic surplus.

[1]  R. Belmans,et al.  The role of electricity: A new path to secure, competitive energy in a carbon-constrained world , 2007 .

[2]  C. Senabre,et al.  Methods for customer and demand response policies selection in new electricity markets , 2007 .

[3]  Goran Strbac,et al.  Demand side management: Benefits and challenges ☆ , 2008 .

[4]  G.C. Heffner,et al.  Innovative approaches to verifying demand response of water heater load control , 2006, IEEE Transactions on Power Delivery.

[5]  Lars J Nilsson,et al.  Theory-based policy evaluation of 20 energy efficiency instruments , 2008 .

[6]  J. Odada.  Intermediate Microeconomics I , 2011 .

[7]  M. Stadler,et al.  Policy strategies and paths to promote sustainable energy systems--The dynamic Invert simulation tool , 2007 .

[8]  Racine Tadeu Araújo Prado,et al.  Assessment of energy efficiency in electric storage water heaters , 2008 .

[9]  Thomas J. Overbye,et al.  Modeling the consumer benefit in the optimal power flow , 1999, Decis. Support Syst..

[10]  Peng Wang,et al.  Technique to evaluate nodal reliability indices and nodal prices of restructured power systems , 2005 .

[11]  S. Stoft.  Power System Economics: Designing Markets for Electricity , 2002 .

[12]  Martin Kumar Patel,et al.  “White and Green”: Comparison of market-based instruments to promote energy efficiency , 2005 .

[13]  I. Graabak,et al.  Establishment of automatic meter reading and load management, experiences and cost/benefit , 2004, 2004 International Conference on Power System Technology, 2004. PowerCon 2004..