Walrasian Market Clearing for Demand Response Exchange

This paper presents the design and evaluation of an effective market-clearing scheme for trading demand response (DR) in a deregulated power system. The proposed scheme is called demand response exchange (DRX), in which DR is treated as a public good to be exchanged between two groups of participating agents, namely DR buyers and DR sellers. While buyers require DR and are willing to pay for it, sellers have the capacity to curtail customer loads to supply DR on request. The DRX market clearing scheme uses Walrasian auctions, where agents update their DR quantity bids in response to prices adjusted by the market operator. This auction is repeated iteratively until market equilibrium is obtained at the point where the market outcome is proven to be Pareto optimal. The proposed scheme is tested on a small power system and its effectiveness substantiated.