The Impact Of Residential Energy Management Systems On Electricity Retail Portfolios

The general modelling technique used for residential energy management systems and customer diversity present challenges when ascertaining the large-scale impact of these device on retail portfolio profit and risk. Consequently, the purpose of this research was to use a novel generalized model of a residential energy management system to assess changes in retail profit and risk when these devices are present on a large scale. Load profile smart-meter data from 5379 households that participated in the “Low Carbon” London project and spot price data from the N2EX market in the UK was used to model a multi-objective energy management system. The optimal portfolio profit when these devices are installed in socially distinct groups, under different tariff designs, for different scenarios of operational objectives for the device was found. Correlation analysis was then employed to determine the influence of customer diversity on financial risk under the same conditions. The analysis resulted in two major findings. Firstly, under certain conditions, retail profit can increase whilst using energy management systems to reduce electricity demand. Secondly, installing these devices amongst different customers can strengthen (or weaken) the relationship between customer diversity and retail risk depending on the operational objectives used for these devices. Retailers seeking to incorporate these devices into their energy portfolios need to carefully account for these factors for successful portfolio outcomes.