An improved electricity market model on demand response considering distribution loss sensitivities

This study examines the North American electricity wholesale market design concerning the Demand Response (DR) resources. It shows that the competitiveness of DR bids is underrepresented when the DR impacts on distribution network losses are neglected. The study further proposes changes to the current market design by incorporating the loss sensitivities of DR resources in the market clearing algorithms. The quantities and prices of the resultant market clearing outcomes will correctly represent the market´s incentives for the DR resources. This study also describes an effective method for computing distribution network loss sensitivities, which can be applied to study large-scale practical distribution system networks. This method can help facilitate the practical implementation of the proposed market design changes, with necessary collaboration from the local distribution system operators.