Role of Flexible Demand in Supporting Market-Based Integration of Renewable Generation

Abstract

Previous work has analyzed the renewable generation hosting capacity of electricity systems and the relevant value of flexible demand from a techno-economic perspective, considering the balancing and network challenges associated with a large-scale integration of renewables. This paper investigates these issues from a market perspective, considering the challenges of low energy prices and renewables’ investment
cost recovery. In this context, a multi-period bi-level optimization model is developed, where the upper level maximizes the renewable generation capacity subject to the long-term profitability constraint and the lower level represents the market clearing process, accounting for the time-coupling operational constraints of flexible demand. This bi-level problem is solved after converting it to a single-level mixed-integer linear problem (MILP). Case studies validate the proposed model and demonstrate that demand flexibility increases the maximum renewable generation capacity that can be integrated in the
system without violating its profitability constraint.