Market-based coordination for domestic demand response in low-carbon electricity grids
Elizondo-González, Sergio Iván
Efforts towards a low carbon economy are challenging the electricity industry. On the supply-side, centralised carbon-intensive power plants are set to gradually decrease their contribution to the generation mix, whilst distributed renewable generation is to successively increase its share. On the demand-side, electricity use is expected to increase in the future due to the electrification of heating and transport. Moreover, the demand-side is to become more active allowing end-users to invest in generation and storage technologies, such as solar photovoltaics (PV) and home batteries. As a result, some network reinforcements might be needed and instrumentation at the users’ end is to be required, such as controllers and home energy management systems (HEMS). The electricity grid must balance supply and demand at all times in order to maintain technical constraints of frequency, voltage, and current; and this will become more challenging as a result of this transition. Failure to meet these constraints compromises the service and could damage the power grid assets and end-users’ appliances. Balancing generation, although responsive, is carbon-intensive and associated with inefficient asset utilisation, as these generators are mostly used during peak hours and sit idle the rest of the time. Furthermore, energy storage is a potential solution to assist the balancing problem in the presence of non-dispatchable low-carbon generators; however, it is substantially expensive to store energy in large amounts. Therefore, demand response (DR) has been envisioned as a complementary solution to increase the system’s resilience to weather-dependent, stochastic, and intermittent generation along with variable and temperature-correlated electric load. In the domestic setting, operational flexibility of some appliances, such as heaters and electric cars, can be coordinated amongst several households so as to help balance supply and demand, and reduce the need of balancing generators. Against this background, the electricity supply system requires new organisational paradigms that integrate DR effectively. Although some dynamic pricing schemes have been proposed to guide DR, such as time of use (ToU) and real-time pricing (RTP), it is still unclear how to control oscillatory massive responses (e.g., large fleet of electric cars simultaneously responding to a favourable price). Hence, this thesis proposes an alternative approach in which households proactively submit DR offers that express their preferences to their respective retailer in exchange for a discount. This research develops a computational model of domestic electricity use, and simulates appliances with operational flexibility in order to evaluate the effects and benefits of DR for both retailers and households. It provides a representation for this flexibility so that it can be integrated into specific DR offers. Retailers and households are modelled as computational agents. Furthermore, two market-based mechanisms are proposed to determine the allocation of DR offers. More specifically, a one-sided Vickrey-Clarke-Groves (VCG)-based mechanism and penalty schemes were designed for electricity retailers to coordinate their customers’ DR efforts so as to ameliorate the imbalance of their trading schedules. Similarly, a two-sided McAfee-based mechanism was designed to integrate DR offers into a multi-retailer setting in order to reduce zonal imbalances. A suitable method was developed to construct DR block offers that could be traded amongst retailers. Both mechanisms are dominant-strategy incentive-compatible and trade off a small amount of economic efficiency in order to maintain individual rationality, truthful reporting, weak budget balance and tractable computation. Moreover, privacy preserving is achieved by including computational agents from the independent system operator (ISO) as intermediaries between each retailer and its domestic customers, and amongst retailers. The theoretical properties of these mechanisms were proved using worst-case analysis, and their economic effects were evaluated in simulations based on data from a survey of UK household electricity use. In addition, forecasting methods were assessed on the end-users’ side in order to make better DR offers and avoid penalties. The results show that, under reasonable assumptions, the proposed coordination mechanisms achieve significant savings for both end-users and retailers, as they reduce the required amount of expensive balancing generation.