From passive demand response to proactive demand participation

Limited progress has been made in the past few years in increasing demand response participation rate in the United States. The structural rigidity of existing price-based and incentive-based demand response programs results in inadequate and inefficient utilization of demand flexibility in electricity market operations. In this paper, an innovative proactive demand participation scheme is developed. This new scheme enables customers to actively express and communicate their consumption preferences to market operators rather than passively receive and react to time varying electricity prices and demand reduction signals. A novel framework for integrated wholesale and retail market operations with proactive demand participation and customer aggregation is proposed. The proactive demand response scheme is implemented in a simulation environment. The simulation results show that the proactive demand participation scheme is superior to the passive demand response approach. The proactive demand participation approach not only increases overall market efficiency but also reduces price volatility.