Integration of Demand Response in Electricity Market Capacity Mechanisms

Lambin, Xavier

doi:10.1016/j.jup.2020.101033

Cited by 7 publications

(4 citation statements)

References 24 publications

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“…10. Lambin (2020) argues that it would be possible to get efficient outcomes also when the price cap is below this level if tailor-made contracts are used. Tómasson et al (2020) outline a design with uplift payments to producers so that they effectively face prices above the price cap, while consumer prices are capped.…”

Section: Discussionmentioning

confidence: 99%

A Survey of Capacity Mechanisms: Lessons for the Swedish Electricity Market

Holmberg¹,

Tangerås²

2023

The Energy Journal

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Many electricity markets use capacity mechanisms to support producers. Capacity payments can mitigate imperfections associated with "missing money" in the spot market and solve transitory capacity shortages caused by investment cycles, regulatory changes, or technology shifts. We discuss capacity mechanisms used in electricity markets around the world. We argue that correctly designed strategic reserves are likely to be more efficient than market-wide capacity mechanisms in jurisdictions that rely on substantial amounts of variable renewable energy and hydro power for electricity supply, such as Sweden.

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Section: Discussionmentioning

confidence: 99%

A Survey of Capacity Mechanisms: Lessons for the Swedish Electricity Market

Holmberg¹,

Tangerås²

2023

The Energy Journal

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“…Ref. [66] discusses integrating DR within capacity remuneration mechanisms, advocating for differentiated payments tailored to DR technologies' roles and emphasizing digital tools in DR activation and operation. It critiques traditional mechanisms while praising digital solutions for improving market responsiveness and DR's economic viability.…”

Section: Mechanisms and Technologies In Drmentioning

confidence: 99%

Digitalization Processes in Distribution Grids: A Comprehensive Review of Strategies and Challenges

Aghahadi,

Bosisio,

Merlo

et al. 2024

Applied Sciences

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This systematic review meticulously explores the transformative impact of digital technologies on the grid planning, grid operations, and energy market dynamics of power distribution grids. Utilizing a robust methodological framework, over 54,000 scholarly articles were analyzed to investigate the integration and effects of artificial intelligence, machine learning, optimization, the Internet of Things, and advanced metering infrastructure within these key subsections. The literature was categorized to show how these technologies contribute specifically to grid planning, operation, and market mechanisms. It was found that digitalization significantly enhances grid planning through improved forecasting accuracy and robust infrastructure design. In operations, these technologies enable real-time management and advanced fault detection, thereby enhancing reliability and operational efficiency. Moreover, in the market domain, they support more efficient energy trading and help in achieving regulatory compliance, thus fostering transparent and competitive markets. However, challenges such as data complexity and system integration are identified as critical hurdles that must be overcome to fully harness the potential of smart grid technologies. This review not only highlights the comprehensive benefits but also maps out the interdependencies among the planning, operation, and market strategies, underlining the critical role of digital technologies in advancing sustainable and resilient energy systems.

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“…Overall, participating in a capacity market provides DR aggregators with a long-term revenue stream and incentives to invest in new or existing resources that can provide capacity to the grid during periods of peak demand. However, some studies still show that the capacity remuneration schemes currently implemented provide inadequate incentives to DR operators-for example, [38].…”

Section: Capacity Marketmentioning

confidence: 99%

Unlocking the Value of Aggregated Demand Response: A Survey of European Electricity Markets

Božičević Vrhovčak,

Malbašić

2023

Energies

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This paper focuses on the possible roles of aggregators in the European electricity markets and the challenges and opportunities they face in participating in different market segments. Demand response (DR) is becoming increasingly important with the growth of renewable energy, and aggregators can play a critical role in balancing supply and demand in real time. This paper provides an overview of prices in electricity markets in which DR aggregators can participate and provides recommendations for aggregators regarding which markets to focus on. However, the regulatory framework for aggregators is still evolving in Europe, creating challenges for them to navigate different market designs, regulatory frameworks, and pricing mechanisms. Through a combination of literature review and data analysis, this paper aims to provide insights for aggregators on how to maximize profits and minimize risks in the European electricity market. The article achieves this by conducting an extensive analysis of various markets, comparing their essential attributes relevant to the functioning of aggregators.

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Integration of Demand Response in Electricity Market Capacity Mechanisms

Cited by 7 publications

References 24 publications

A Survey of Capacity Mechanisms: Lessons for the Swedish Electricity Market

A Survey of Capacity Mechanisms: Lessons for the Swedish Electricity Market

Digitalization Processes in Distribution Grids: A Comprehensive Review of Strategies and Challenges

Unlocking the Value of Aggregated Demand Response: A Survey of European Electricity Markets

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