Economic valuation of demand response in power systems with high wind power penetration

The unpredictable nature of the wind generation poses an obstacle to high penetration of wind energy in the electric power systems. Demand response (DR) may be considered as an efficient approach to cope with the energy unbalances caused by the wind power intermittency. However، while high penetration of the wind generation in the power systems leads to reduced market prices but it may result in lowering participation in the DR programs. Fair mechanism for valuation of the DR can increase the demand-side participation which consequently facilitates wind power integration in the power systems. This paper focuses on the economic valuation of the DR according to its potential for mitigating the wind power forecast error in the power system operation. For this purpose، a mathematical model is developed to find the maximum monetary incentive for the DR that the system operator is willing to pay to the DR providers. In the proposed model، DR’s potential in reducing the cost of supplying load as well as its capability in reducing the cost of system reserve، start up and shut down of units، load shedding and wind power spillage، are considered. The results of the proposed valuation method provide valuable information for both the system operator and demand response providers. The proposed method is implemented on a six-bus test system and discussions on results are presented.