Electricity Market Structure with Individual Pricing Mechanism

The most recent trends in modern electricity markets include active transformation of demand response programs into so-called intelligent demand response (IDR). This is mainly enabled by the presence and wider adoption of advanced demand side management (DSM) tools, including various smart metering, sensing and automation technologies. The larger penetration of IDR and DSM systems entails higher demand flexibility, which creates a favorable environment for electricity markets with high penetration of renewables. However, it is not easy to assess and measure the real effect of load flexibility in the context of the current market mechanisms. Specifically, the contribution of flexible consumers in the formation of electricity prices is not reflected fairly. The main reasons of this phenomena are related to the diversity of DR programs and unregistered population of price responsive consumers. In this paper, we propose a new electricity market mechanism with a centralized DR pool that guarantees a fair distribution of DR benefits, reflected in the proposed individual billing scheme. The proposed DR pool enables to pre-define each consumer's contribution to achieve system objectives. The efficacy of the developed day-ahead electricity market model is extensively compared with the conventional market schemes in the context of different levels of flexible loads' presence.