The Role of Demand Response as an Alternative Transmission Expansion Solution in a Capacity Market

Demand response cannot only be used as a power supply resource to produce a negawatt in high power prices or when the reliability of the grid is threatened, but can also be applied to resolve a transmission expansion planning problem instead of implementing a costly and complex transmission upgrade solution. Essentially, the demand response resources (DRRs) can relieve the capacity requirement for a load area, and thereby relieve the import transmission requirement. This paper explores the role of DRRs as an alternative solution to the required transmission upgrades in the context of a proposed capacity market modeled based on Pennsylvania-New Jersey-Maryland (PJM) capacity market model. Numerical results show that the DRRs can indeed replace the needed transmission upgrades.