Effects of price-responsive residential demand on retail and wholesale power market operations

Auswin George Thomas, Chengrui Cai, Dionysios C. Aliprantis and Leigh Tesfatsion ()

ISU General Staff Papers from Iowa State University, Department of Economics

Abstract: This paper describes a computational platform for studying the effects of price-responsive residential demand for air-conditioning (A/C) on integrated retail and wholesale power market operations. The physical operations of the A/C system are represented by means of the physics-based equivalent thermal parameter model. Residential A/C energy usage levels are determined by means of a stochastic dynamic-programming optimization in which the daily comfort attained by the resident is optimally traded off against his daily energy costs, conditional on retail energy prices, environmental conditions, and A/C operational constraints. An example is provided to illustrate the dynamic feedback loop connecting residential A/C load, the energy prices determined at wholesale conditional on A/C load, and the retail energy prices offered to residential A/C consumers by wholesale energy buyers.

Date: 2012-01-01
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genstf:201201010800001048

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