The Role of Demand-Side Flexibility in Hedging Electricity Price Volatility in Distribution Grids

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Abstract

Locational Marginal Price (LMP) is a dual variable associated with supply-demand matching and represents the cost of delivering power to a particular location if the load at that location increases. In recent times it become more volatile due to increased integration of renewables that are intermittent. The issue of price volatility is further heightened during periods of grid congestion. Motivated by these problems, we propose a market design where, by constraining dual variables, we determine the amount of demand-side flexibility required to limit the rise of LMP. Through our proposed approach a price requesting load can specify its maximum willingness to pay for electricity and through demand-side flexibility hedge against price volatility. For achieving this, an organizational structure for flexibility management is proposed that exhibits the coordination required between the Distribution System Operator (DSO), an aggregator and the price requesting load. To demonstrate the viability of our proposed formulation, we run an illustrative simulation under infinite and finite line capacities.

Original languageEnglish
Title of host publication2019 IEEE Power and Energy Society Innovative Smart Grid Technologies Conference, ISGT 2019
PublisherInstitute of Electrical and Electronics Engineers (IEEE)
ISBN (Electronic)9781538682326
DOIs
Publication statusPublished - 2019
Event2019 IEEE Power and Energy Society Innovative Smart Grid Technologies Conference, ISGT 2019 - Washington, United States
Duration: 18 Feb 201921 Feb 2019

Conference

Conference2019 IEEE Power and Energy Society Innovative Smart Grid Technologies Conference, ISGT 2019
CountryUnited States
CityWashington
Period18/02/1921/02/19

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