A Pricing Method for Distribution System Aggregators Considering Differentiated Load Types and Price Uncertainty

The utilization of demand response flexibility has become a significant method to cope with the intermittence of renewable energy sources in distributed systems. This paper proposed a new pricing method for demand response resources managed by a distribution system aggregator, which is deduced from analyzing the operating revenue within the timescale from hours to years. In the proposed model, the hourly decision-making of an aggregator is formulated as a newsvendor model and uncertainties in the long-term decisions are modelled by a backward valuation process. It maximizes the benefit of an aggregator by considering the price and quantity uncertainties of distributed load/generation in day-ahead and real-time wholesale electricity markets. Meanwhile, the coexistence of controllable and uncontrollable loads is also considered, where the former refers to electricity consumption from end-users who are equipped with smart devices for energy management, and the latter load demand of passive end-users who have no willingness or capability to participate in the demand response schemes. Finally, numerical studies are carried out to demonstrate the feasibility and effectiveness of the developed model and methods, and the impacts of active end-user percentage on the aggregator operation under the proposed pricing method are also compared and illustrated.

Automated summary

In this paper, a new pricing method for demand response resources managed by a distribution system aggregator is proposed. By analyzing operating revenue and maximizing aggregator benefit, the model considers different types of loads to handle uncertainties in the electricity markets.