The Role of Demand Response in the Future Electricity System: Implications on market design and the barriers perceived by Dutch non-domestic consumers

Nowadays, there is growing consensus, among policy makers and market participants, that Demand Response (DR) is a critical resource for achieving increasing competitiveness and more efficient operation in the electricity system, as well as greater sustainability in the society. When there will be more intermittent energy sources like solar and wind energy in the Dutch electricity system, DR can be one of the cost-efficient solutions for ensuring the security of supply. It is predicted by CE Delft that the need for peak power will increase by 30% in the Netherlands, until 2023.DR is the change in the electricity consumption patterns by the customers in reaction to price signals or to specific requests, with the aims of providing flexibility to the electricity system and meanwhile benefiting from doing so. DR can contribute to system balancing, by the physical influence of load shedding and load shifting. Load shifting involves either shifting electricity use during peak times, or increasing electricity use during off peak times. Load shedding means that the power consumption is irrevocably reduced, which for the industry means lost production. It is found that although most Dutch non-domestic companies are interested in DR, they haven’t investigated much in their DR potential yet. A lot of companies currently see no business cases in DR, because of the current oversupply in flexible energy sources and low electricity prices. Most importantly, some energy consumers (e.g: iron & steel industry, telecommunication industry) have inflexible processes to secure their core business. It is also found that most DR resources come from Small-Medium Enterprises (SMEs). In the Netherlands, first movers among the Dutch non-domestic consumers could be cold stores, water management companies, and greenhouse farmers, due to their flexible consumption processes. However, they perceive huge barriers to implement DR, mainly market complexity, market entry access and transaction costs. A typology of DR programmes in different market segments is summaries in this thesis report, according to previous literatures. However, it is necessary to specify the DR programmes in more detailed levels for practical use in specific national market. In the Dutch electricity market, ETPA and Senfal are two interesting stakeholders who act as enablers to facilitate (automatic) DR behaviour. ETPA as a low-threshold trading platform, serves as a market place to trade DR resources in the electricity short-term markets. They provide bidding portfolios to reduce the market complexity, require the minimum bidding volume of 0.5MW to open more market entry access and offer relatively low membership fee for lowing the transaction costs to SMEs. Meanwhile, Senfal provides knowledge support to consumers, by using intelligent software to optimize their consumption according to the electricity prices. Senfal also represents the typical business mode of Dutch independent aggregators, who cooperation with energy suppliers and provide DR services. The complex barriers need cooperation among market stakeholders to work out with the reliable and cost-beneficial market solutions. TenneT, the Dutch Transmission System Operator (TSO) with regulated tasks, is pro-actively investigating in future solutions, engaging with all the market stakeholders.Systems Engineering, Policy Analysis and Management (SEPAM