Provision of grid flexibility by distributed energy resources in residential dwellings using time-of-use pricing

Abstract Due to the high penetration of renewable energy systems (RES), power system requires more flexibility to respond to the fluctuation of variable renewable energy sources. A viable economic measure that can be used to achieve greater flexibility is using distributed energy resources (DERs) installed on the demand side. Electricity time-of-use (TOU) rates can be used as an incentive to encourage prosumers to provide more flexibility by controlling the DERs. We propose TOU pricing that ensures every prosumer saves on energy costs. An aggregator procures flexibility from residential prosumers and provides this flexibility to a power system operator in exchange for a reward. A simulation model that reflects the power system’s flexibility requirements and the assignment of TOU pricing to satisfy the cost minimization requirements of the DERs of prosumers is described. Numerical simulations were performed for three scenarios with different flexibility requirements. The results indicate that the proposed TOU pricing is economically efficient and enables the aggregator to procure flexibility from its prosumers while increasing its own profit and reducing the energy cost of its prosumers.