An Optimal Market-Oriented Demand Response Model for Price-Responsive Residential Consumers

For many years in the wholesale electricity market, the generation companies would only seek to compete with each other to sell electric energy to customers in a way to make more profit. Moreover, there was no mechanism in such an environment to enable demand-side participation especially for residential building units with relatively high power consumptions. This caused the increasing market power of generation companies and soon to realize that the demand-side would yield to any price to purchase the required energy. Having gradually identified this issue, demand response (DR) programs were introduced as confronting tools to help consumers being away from such situations. This paper proposes an effective market-oriented DR model for residential consumers to change their consumption patterns over the time for getting maximum benefits based on their own utility functions. According to the results of simulated case studies, it is demonstrated that the proposed model is able to adapt to different consumers with different levels of flexibility against the price signals. Moreover, simulation results demonstrate that the residential consumption levels can be easily adjusted during the examined period in a way not only to meet the user’s objectives, but also to reshape and smooth the system’s aggregated load profile.