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Energy Systems
Published in: Energy Systems 1/2020

10-11-2018 | Original Paper

Co-optimization of demand response and interruptible load reserve offers for a price-making major consumer

Authors: Mahbubeh Habibian, Golbon Zakeri, Anthony Downward, Miguel F. Anjos, Michael Ferris

Published in: Energy Systems | Issue 1/2020

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Abstract

We study demand-side participation in an electricity market for an industrial consumer of electricity, with some flexibility to reduce demand, and capable of offering interruptible load reserve. Our consumer is a price maker, and the impact of its actions in the market is modelled via a bi-level optimization problem. We have extended a standard model for optimal strategic consumption, to the case where reserve offer curves need to be optimized simultaneously with consumption curves; our models provide intuition into this interaction. Furthermore, we provide tailor-made solution strategies for the resulting problems under uncertainty, and report numerical results of our implementation on instances over the full New Zealand network yielding a realistic and large problem set.
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Appendix
Available only for authorised users
Footnotes
1
In NZEM, the average number of times reserve is triggered is 2 times over a year [25]. Given the number of trading periods in a year (\(48\times 365 = 17,520\)) the \(\rho ^r\) value in our case study is approximately 0.0001%.
 
2
Note that in this example we observe that only with \(d\ge 126\), the energy price becomes higher than u. But although \(u = 190\), and the price of energy is  $197, since the price of reserve is  $57, it is still in the interests of the consumer to consume. However, if the marginal utility of consuming electricity for the strategic consumer was not high enough, the optimal action would be to consume much less energy, or none at all to avoid a negative profit.
 
3
This method, when applied to a multi-node network, permits the strategic consumer to be located at a single node. Our algorithm is not immediately applicable for a strategic consumer who purchases electricity at multiple nodes (i.e. the consumer that owns plants located at different nodes in the market).
 
4
Degenerate solutions may occur at the edge of regions, where the price of energy or reserve could be a convex combination of prices of the two adjacent regions.
 
5
The clairvoyant policy is calculated by solving the deterministic MIP model with the realized scenario’s parameter values.
 
6
The marginal value of electricity for NZAS may change over time as it is affected by exogenous parameters such as the global price of aluminum, government policies, etc.
 
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Metadata
Title
Co-optimization of demand response and interruptible load reserve offers for a price-making major consumer
Authors
Mahbubeh Habibian
Golbon Zakeri
Anthony Downward
Miguel F. Anjos
Michael Ferris
Publication date
10-11-2018
Publisher
Springer Berlin Heidelberg
Published in
Energy Systems / Issue 1/2020
Print ISSN: 1868-3967
Electronic ISSN: 1868-3975
DOI
https://doi.org/10.1007/s12667-018-0312-x

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