The business value of demand response for balance responsible parties

Abstract: By using IT-solutions, the flexibility on the demand side in the electrical systems could be increased. This is called demand response and is part of the larger concept called smart grids. Previous work in this area has concerned the utilization of demand response by grid owners. In this thesis the focus will instead be shifted towards the electrical companies that have balance responsibility, and how they could use demand response in order to make profits. By investigating electrical appliances in hourly measured households, the business value from decreasing electrical companies’ power imbalances has been quantified. By an iterative simulation scheme an optimal value was found to be 977 SEK/year and appliance. It could however be shown that the value became larger for energy inefficient households, and that such consumers’ participation in a demand response market would be prioritized ahead of other measures like isolating walls is rather unlikely. Thermal appliance whose load depend on the outdoor temperature are less valuable for demand response during the summer months, and the annual value would increase if less seasonally dependent appliances were used. Additionally, by increasing the market price amplitudes and the imbalance price volatility, it could be shown that the potential for such demand response markets is larger in e.g. the Netherlands and Germany.