Optimal Offering of Demand Response Aggregation Company in Price-Based Energy and Reserve Market Participation

This paper investigates the combined price-based scheduling/participation of generation company (GENCO) and demand response aggregation company (DRACO) in energy and reserve markets. The temporally coupled customer behavior can be better represented using the load profile attributes, when compared to the traditional approach with random willingness assignment. The proposed cost models for energy and reserve offerings consider the effect of load type, load pattern consumption, and availability/flexibility patterns of each type of load with time of use constraints. The load curtailment (LC) cost model accounts for criticality and willingness of the responsive loads via utilization factor and availability factors, respectively. The proposed cost models present a realistic picture of LC cost by eliminating the random willingness factor of the existing LC cost models. Thereafter, various cases of market participation with different reserve payment policies are formulated for combined participation of GENCO and DRACO. In addition, the sensitivity of participation decision of various entities to the seasonal load variation is examined for summer and winter loading profiles. The proposed cost models and scheduling framework is simulated using GENCO with ten thermal units and DRACO with various load types, profiles distributed across different load sectors comprising of commercial, residential, industrial, municipal, and agricultural loads. The combined participation resulted in improved market surplus with reduced GENCO surplus. Also, the energy and reserve market surplus dependence on seasonal load patterns is observed across different test cases and payment policies.