Demand Response Potential of Electricity End-users Facing Real Time Pricing

Abstract Because of the increasing supply of intermittent renewable energy sources, demand response by end-users may be helpful to balance electricity networks and to prevent network bottlenecks. This paper estimates the hourly potential of price-based demand response in a number of European countries, especially for the residential end-users, using data from the real-time market. For that purpose, we investigate the hourly own and cross elasticities in different European countries. Based on these elasticities, historical spot prices as well as a number of technical constraints, we construct a price-based optimization model to identify the hourly potentials of price-based demand response. The estimation results show that the magnitudes of elasticities are relatively small, while the hourly potentials in the residential sector are not significantly higher than those in industrial and tertiary sector. This suggests that the potential of price-based demand response in the residential sector to deal with the increasing supply of renewables is small