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Which electricity market design to encourage the development of demand response?

Vincent Rious, Yannick Perez () and Fabien Roques ()
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Vincent Rious: E3S - Supélec Sciences des Systèmes - Ecole Supérieure d'Electricité - SUPELEC (FRANCE)

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Abstract: Demand response is a cornerstone problem in electricity markets under climate change constraints. Most liberalized electricity markets have a poor track record at encouraging the deployment of smart meters and the development of demand response. In Europe, different models are considered for demand response, from a development under a regulated regime to a development under competitive perspectives. In this paper focusing on demand response and smart metering for mid-­‐size and small consumers, we investigate which types of market signals should be sent to demand managers to see demand response emerge as a competitive activity. Using data from the French power system over nine years , we compare the possible market design options which would enable the development of demand response. Our simulations demonstrate that under the current market rules demand response is not a profitable activity in the French electricity industry. Introducing a capacity market could bring additional revenues to demand response providers and improve incentives to put in place demand response programs in a market environment.

Keywords: Market Design; Demand Response; Capacity Market (search for similar items in EconPapers)
Date: 2015
New Economics Papers: this item is included in nep-ene and nep-reg
Note: View the original document on HAL open archive server: https://hal.archives-ouvertes.fr/hal-01286331
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Published in Economic Analysis and Policy, Elsevier, 2015, 48, pp.128-138. ⟨10.1016/j.eap.2015.11.006⟩

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Related works:
Working Paper: Which electricity market design to encourage the development of demand response? (2016)
Journal Article: Which electricity market design to encourage the development of demand response? (2015) Downloads
Working Paper: Which electricity market design to encourage the development of demand response? (2012) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-01286331

DOI: 10.1016/j.eap.2015.11.006

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