Positive demand response and multi-hour net benefit test

Abstract The Federal Energy Regulatory Commission in the USA defines demand response as a means of reducing energy consumption by customers from their expected consumption in response to high energy prices or to incentive payments. Conventional demand response that reduces demand is termed as negative demand response. In certain cases, positive demand response, which increases demand, might be more beneficial. For example, in systems with high peak to off-peak demand ratios, positive demand response can be used during low demand hours, as it reduces ramping needs and hence reduces prices during peak demand hours. Significant benefits may arise, as demand response services are paid proportional to prevailing hourly prices, with the positive demand response resources typically purchased at more economic rates. While positive demand response is used in power systems and other sectors of the economy, there are no current systematic and scientific ways to optimally procure positive demand response resources while ensuring that customer electricity rates are reduced. In this paper, the concept of positive demand response is mathematically formulated. A formal method for scheduling positive demand response is presented and validated on typical test systems to show the benefits. To quantify benefits to customers, as laid out in Federal Energy Regulatory Commission Order 745, a new multi-hour net benefit test is proposed that considers positive demand response in addition to negative demand response. This test is implemented in case studies and a sensitivity analysis is conducted. The paper shows ways to use the proposed formulation to design optimal positive demand response procurement programs.