A general investigation about how to divide DR benefits between DSO and markets

It has been suggested that demand response (DR) would be one of the most promising and important features of an energy system. However, the development of residential customers' DR has not been very successful so far. Among the main reasons have probably been inadequate benefits that DR provides to different market participants. Various DR practices have been proposed, but only a few of them have been successful with the present market prices or models. This paper studies the benefits of various DR concepts based on a case analysis of hour-based consumption and market price data in Finland. The study introduces a methodology that enables profitable DR, and analyzes how to distribute the DR benefits among the DSO and markets. The main requirement for this development is different market actors participating in demand response together. The conclusion is that an active demand response market requires new pricing models and all market actors to establish a business case.