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

Abstract

This paper develops a bi-level optimization model for voluntary demand-side flexibility. The Distribution System Operator, in the Upper Level, maximizes welfare by investing in the network and setting the flexibility compensation. Consumers, in the Lower Level, can be prosumers and commercial consumers that invest in rooftop solar and batteries and offer demand-side flexibility, or passive consumers which cannot invest in flexible technologies but still can offer their load flexibility. We find that voluntary demand-side flexibility increases welfare and allows network investment savings and its benefits reach all types of consumers. Such benefits can be influenced with the flexibility compensation design.

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