Residential Demand Response Based on Dynamic Electricity Pricing: Theory and Practice

The need for flexibility within power system operation is growing as more intermittent renewables with limited controllability are integrated. While traditionally this need is met by supply side resources, the demand side also has intrinsic flexibility available which could be tapped, often referred to as demand response. Although policy makers and industry recognize the value of demand response, its use and understanding remains limited. This is especially the case on the residential level.This thesis aims at enhancing the understanding of demand response by addressing three knowledge gaps, ranging from designing dynamic tariff schemes to incentivize demand response, over quantifying the residential load modifications these cause, until determining the final benefits this brings for households and society as a whole.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 don t 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 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 elasticities.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.status: publishe