Curtailment Contract Design for HVAC Systems

This contribution proposes a curtailment contract design for HVAC systems and specifies how control rights for flexible loads could be sold to aggregators willing to use demand response to balance their generation portfolio. We build upon a design brought forward by Campaigne and Oren (2016) and modify the approach for contracting consumers with HVAC systems. Specifically, we include assumptions about the concavity of utility and time-interdependencies in multi-period contracts and propose an online cut-off rule. We use mechanism design to formulate the type-specific contract set for customers with different valuations for temperature deviations and demonstrate incentive compatibility. Furthermore, we discuss the difficulties of complex type parameter spaces for incentive compatibility and explore how contract menus and the results change with the customer base, prices, and other external parameters.