Date: 2012
Type: Working Paper
Which Electricity Market Design to Encourage the Development of Demand Response?
Working Paper, EUI RSCAS, 2012/12, Loyola de Palacio Programme on Energy Policy, [Florence School of Regulation], [Energy]
RIOUS, Vincent, ROQUES, Fabien A., PEREZ, Yannick, Which Electricity Market Design to Encourage the Development of Demand Response?, EUI RSCAS, 2012/12, Loyola de Palacio Programme on Energy Policy, [Florence School of Regulation], [Energy] - https://hdl.handle.net/1814/20622
Retrieved from Cadmus, EUI Research Repository
Demand response is a cornerstone problem in electricity markets under climate change constraint. 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 manager to see demand response emerge as a competitive activity. Using data from the French power system over the last 8 years, we compare the possible market design options to allow demand response to develop. Our simulations demonstrate that with the current market rules, demand response is not a profitable activity in the French electricity industry. Introducing a reserve and/or capacity remuneration could bring additional revenues to demand response providers and improve incentives to put in place demand response programs in a market environment.
Cadmus permanent link: https://hdl.handle.net/1814/20622
ISSN: 1028-3625
Series/Number: EUI RSCAS; 2012/12; Loyola de Palacio Programme on Energy Policy; [Florence School of Regulation]; [Energy]
Keyword(s): Market design Demand response Capacity market