Novel business models for Demand Response Exchange

In a restructured power system, there are many players who benefit from Demand Response (DR). These include the Market Operator (MO), the Transmission System Operator (TSO), Distributors, Retailers, Aggregators, and also consumers. This paper proposes a new concept - Demand Response eXchange (DRX) - in which DR is treated as a virtual resource that can be exchanged between two groups of players, namely the DR user group and the DR supplier group. Players within the DR user group, including the MO, the TSO, Distributors and Retailers, are the ones who need DR to improve the reliability of their related business and systems. Players within the DR supplier group, including Aggregators and consumers, are the ones capable of negotiating DR with the users. The paper suggests that there are two alternative types of business models for DRX, namely bilateral and pool-based. In the bilateral model, DR users and DR suppliers independently arrange the exchange of DR with no participation by a system operator. In the pool-based model, DR exchange between suppliers and users is facilitated and settled by a new system operator named DRX Operator (DRXO). The paper then focuses on investigating the feasibility of the pool-based model versus the bilateral model with regard to power system restructuring.