Residential demand response based on dynamic electricity pricing

On January 27, 2015, doctor Benjamin Dupont has publicly defended his doctoral thesis at the department of electrical engineering of the KU Leuven. His work, entitled “Residential demand response based on dynamic electricity pricing: theory and practice”, builds on about 5 years of research in the field of smart grids. He has focused on the active consumer behaviour in the electricity market which is also referred as demand response. In an electricity system largely based on power generation from renewable energy source, there is an increasing need for flexibility absorbing the variations in the generation profile from these sources. Whereas system flexibility is initially provided by conventional generation units, dr. Dupont considers that consumers adjusting consumption behaviour as an untapped source of flexibility.

His thesis aims at enhancing the understanding of demand response by addressing three knowledge gaps, (1) designing dynamic tariff schemes to incentivize demand response, (2) quantifying the residential load modifications these cause, (3) determining the final benefits this brings for households and society as a whole. Insight are based on a theoretical discussion as well as on the practical results of the LINEAR project

First of all, the demand response incentive following from the current residential tariff designs is limited especially in view of more renewable energy resources. Moreover, these tariffs do not reflect the time-dependency of the underlying cost of electricity. In order to allow demand response and to reflect actual costs to the users, this thesis argues that a balance has to be found between tariff principles related to costs and social acceptability on the one hand, and its resulting demand response incentive on the other. This balance can be accomplished by proper tariff design. It is shown that the choice of the tariff design not only affects the demand response incentive, but also the resulting benefits.

Second, the magnitude to which residential users react to those tariff schemes remains largely unknown. This thesis shows that flexibility obtained from both wet appliances and battery electric vehicles is considerable. Moreover, automation adds to the level and predictability of demand response. Hereby, predictability can be reached by means of price elasticity. Finally, the benefits residential demand response brings to power system operation are not properly identified. This thesis shows that demand response leads to operational benefits as costs of plant operation decrease, while enhancing system reliability. Moreover, demand response proves to be an efficient means to integrate intermittent renewable energy resources. On the investment side, demand response leads to a postponement and reduction of the need for additional generation capacity.

The more you learn, the more you realize how much you don’t know.

Dr. Dupont is humble, making recommendations for further research at the end of his dissertation. Some expansions and improvements to be made to his analyses should allow some additional insights. Alternatively, three new research tracks have also been put forward. First, the impact of remuneration schemes for residential generation facilities on residential bills but also on the DR incentive is largely untested. Therefore, additional field tests involving more households, different user interfaces, and different dynamic pricing schemes may contribute to better knowledge of consumer behaviour. Second, distribution and transmission constraints are not considered in this thesis. Including these technical constraints in economic optimizations provides insights in feasibility of results as described. Third, while this thesis provides insights in savings for households and the power system as a whole, the distribution of these savings and the value flows amongst the different stakeholders are not discussed.

> doctoral thesis resume

> for more information: Benjamin.Dupont@esat.kuleuven.be