Assessing demand response and smart metering impacts on long-term electricity market prices and system reliability

Abstract

This paper proposes a long-term electricity market analysis framework to assess the impacts of the demand response and smart metering infrastructure implementation on market price fluctuations and system reliability. Based on the probabilistic production cost simulation method that has been widely used in conventional power system planning, the suggested framework considers the uncertainties of the demand and the generator availability in a probabilistic manner. Furthermore, the framework considers the strategic interactions between generators (or, equivalently generation companies) and incorporates price responsive demand enabled with smart metering. To demonstrate how market equilibrium price changes and the system reliability enhances as the demand response with smart metering increases, the framework is applied to an experimental system based on the IEEE 1996 Reliability Test System (RTS) data, followed by a case study of 2010 Korean electricity markets. (C) 2012 Published by Elsevier Ltd.