Assessing the economic benefits of flexible residential load participation in the Dutch day-ahead auction and balancing market

In this paper the authors present the potential cost-savings that may arise due to demand response from residential customers participating in the Amsterdam Power eXchange (APX) day-ahead auction and the Dutch balancing energy market which is organised by TenneT, the Dutch Transmission System Operator (TSO). For this purpose, a model for residential demand response is developed that utilises as input historical market data. Furthermore, the model synthesises a daily load profile based on load profiles of Dutch residential customers and simulated data to represent aggregate demands of domestic appliances and electric vehicles. The model is built around the concept of the aggregator, an envisioned legal entity, that contracts large amounts of residential customers and then coordinates them in real-time under different objectives (i.e. economic optimisation based on predicted day-ahead prices and the provision of balancing energy). Simulation results show that the potential economic benefits of residential demand response, on the Dutch electricity markets, is relatively low on a per household basis, but not negligible for the business case of the aggregator.