Demand Response: Social Welfare Maximization in an Unbundled Energy Market Case Study for the Low-Voltage Networks of a Distribution Network Operator in The Netherlands

With the introduction of smart meters, dynamic pricing, and home energy management systems, residential customers are able to react to changes in electricity prices. In an unbundled market, the energy supplier and the network operator may have conflicting interests with respect to demand response (DR) programs. As customer participation is essential to a well-functioning DR program, it is needed to assess which DR programs offer most customer benefits. Two DR program options are analyzed for low-voltage feeders: a program from the energy supplier based on the electricity price, and a DR program from the network operator based on the loading of the network. Depending on the network topology the benefits can change significantly between the two DR programs. DR from an energy supplier point of view might induce undervoltages which lead to additional network reinforcements, while load shifting from a network point of view can generate higher electricity cost.