A Bilevel Model for Voluntary Demand-Side Flexibility in Distribution Grids

27 Pages Posted: 16 Feb 2022

See all articles by Athir Nouicer

Athir Nouicer

Florence School of Regulation/ KU Leuven University

Leonardo Meeus

European University Institute; European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS)

Erik Delarue

KU Leuven

Multiple version iconThere are 3 versions of this paper

Abstract

This paper explores the price setting of demand-side flexibility, modelled as consumers’ voluntary load reduction, in distribution grids. It develops a long-term equilibrium optimization model with a bi-level setting for voluntary demand-side flexibility. In the Upper Level (UL), the Distribution System Operator (DSO) maximizes welfare by deciding the level of network investments and setting the price for demand-side flexibility. The DSO also sets the distribution network tariff in order to recover the network investment and flexibility costs from the Lower Level (LL) consumers. LL’s active residential and commercial consumers react to network tariffs and to the price offered for their flexibility by investing in rooftop solar and batteries and offering a certain volume of demand-side flexibility when requested by the DSO. The passive residential consumers also provide flexibility by decreasing their load, but they do not invest in rooftop solar or batteries. We find that voluntary demand-side flexibility increases welfare and allows significant network investment savings. We also find that the benefits can reach all types of consumers. Besides, it is opportune to apply price differentiation when setting the price for demand-side flexibility, where applicable.

Keywords: Bi-level modelling, Voluntary demand-side flexibility, Distribution network investment, Flexibility compensation, Prosumers

Suggested Citation

Nouicer, Athir and Meeus, Leonardo and Delarue, Erik, A Bilevel Model for Voluntary Demand-Side Flexibility in Distribution Grids. SEGAN-D-22-00160, Available at SSRN: https://ssrn.com/abstract=4021933 or http://dx.doi.org/10.2139/ssrn.4021933

Athir Nouicer (Contact Author)

Florence School of Regulation/ KU Leuven University ( email )

Belgium
50133 (Fax)

Leonardo Meeus

European University Institute ( email )

Fiesole, Tuscany
Italy

European University Institute - Robert Schuman Centre for Advanced Studies (RSCAS) ( email )

Villa La Fonte, via delle Fontanelle 18
50016 San Domenico di Fiesole
Florence, Florence 50014
Italy

Erik Delarue

KU Leuven ( email )

Oude Markt 13
Leuven, Vlaams-Brabant 3000
Belgium

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