Flexible Consumers Reserving Electricity and Offering Profitable Downward Regulation

Previous work on demand response in smart grids considers dynamic real-time prices, but has so far neglected to consider how consumers can also be involved in planning ahead, both for scheduling of consumption and reserving their ability to regulate downward during balancing. This work models a flexible consumer in a novel two-settlement electricity auction. The consumer buys electricity on an ahead market and offers downward regulation on the balancing market. Bidding in two- settlement procedures is a hard problem and the use case of a flexible consumer is a novel problem setting. This poses a challenge for the design of smart ICT that automates bidding in smart grid operations. In a decision-theoretic model that takes the viewpoint of a flexible consumer, we implement a novel, unified format that simplifies computation of bids and can make the guarantee that offering downward regulation increases overall utility. Simulations show that the unified format, when compared to a benchmark format with two independent bids, attains the same utility under a wide range of market conditions despite its simplicity of use. Furthermore, it ensures that the consumer’s offer for downward regulation is indeed executed with the UNI format, which is often not the case with the benchmark format. Index Terms—markets, balancing, flexibility, demand side