Demand response for industrial-scale energy users in Midwest ISO: A dynamic programming approach for curtailing energy use

This paper investigates demand response implementation in Midwest ISO from the perspective of large energy consumers. Acknowledging uncertain electricity prices, we develop a dynamic programming-based model using real-options theory to identify a profitability threshold for demand response (DR) schemes. Our model is tailored to energy-intensive industries, and the cement industry is used as illustrative example in the case study. Simulation results demonstrate season-dependent profitability threshold for a representative cement manufacturing plant.