Measuring the Financial Impact of Demand Response for Electricity Retailers

40 Pages Posted: 7 Aug 2018

Date Written: October 25, 2013

Abstract

Due to the integration of intermittent resources of power generation such as wind and solar, the amount of supplied electricity will exhibit unprecedented fluctuations. Electricity retailers can partially meet the challenge of matching demand and volatile supply by shifting power demand according to the fluctuating supply side. The necessary technology infrastructure such as Advanced Metering Infrastructures for this so-called Demand Response (DR) has advanced. However, little is known about the economic dimension and further effort is strongly needed to realistically quantify the financial impact. To succeed in this goal, we derive an optimization problem that minimizes procurement costs of an electricity retailer in order to control Demand Response usage. The evaluation with historic data shows that cost volatility can be reduced by 7.74%; peak costs drop by 14.35%; and expenditures of retailers can be significantly decreased by 3.52%.

Keywords: Demand Response; Load Shifting; Economic Potential

Suggested Citation

Feuerriegel, Stefan and Neumann, Dirk, Measuring the Financial Impact of Demand Response for Electricity Retailers (October 25, 2013). Available at SSRN: https://ssrn.com/abstract=3215405 or http://dx.doi.org/10.2139/ssrn.3215405

Stefan Feuerriegel (Contact Author)

ETH Zürich ( email )

Weinbergstr. 56/58
Zürich, 8092
Switzerland

HOME PAGE: http://www.mis.ethz.ch/

Dirk Neumann

University of Freiburg ( email )

Albert-Ludwigs-Universität Freiburg, Wirtscha.inf.
Kollegiengebäude II, Platz der Alten Synagoge
Freiburg im Breisgau, 79098
Germany

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