IJEBM, Vol. 5, NO. 3 (September, 2007)

Distributed Energy Resource Allocation and Dispatch: An Economic and Technological Perception

Michael Stadler, Friederich Kupzog, Peter Palensky

Abstract


Despite the recent easing of electricity wholesale prices, the absolute level of on-peak electricity prices for most markets is tremendously high. The German on-peak electricity wholesale price is about 290% higher than six years ago, which has resulted in tariff hikes. These tariff hikes burden economies worldwide and result in higher inflation or economic cool down. The first part of this paper focuses on market power and the amplified price spikes during on-peak hours especially. A simple model is presented that is able to describe the strategic behaviour of similar market players during on-peak and off-peak hours. Furthermore, the work shows in an easy way how consumers can mitigate market power by creating a short-term demand curve due to load-management programs. We conclude that for a sustainable electricity system without unusually high price spikes, a consideration of the short-term demand curve by using automated systems is important. It is necessary to introduce a technical infrastructure that makes unused load shift potential accessible and gives consumers the possibility to respond to price spikes easily in the short term without sacrificing comfort or services. We present a new automated approach to create such a short-term demand curve. The proposed Integral Resource Optimization Network (IRON) indicates a robust and distributed automation network for the optimization of distributed energy supply and usage. We describe a basic generic model for load shifting, which allows describing a collective storage management in an easy way. Furthermore, the first real implementation result of the research is presented–the so-called IRON-Box, a hardware interface that realises the interface between load resources and the IT infrastructure.

Keywords: Demand Response, Distributed Generation (DG), Information Systems, Load Management, Market Issues and Strategic Pricing, Market Power, Real-Time-Pricing