Market Operations using Swing Contracts for Demand Response and Energy Storage

Growing penetration of wind generation, photovoltaics, and other distributed energy resources (DERs) have resulted in increased uncertainties in dynamic balance of supply and demand of energy. Flexible energy resources have become valuable since they can adjust their energy supplies/consumptions to compensate the demand-supply imbalance. Swing contract (SC) is a financial tool that can enable and motivate the flexible energy resources to participate in energy market. Among the existing swing contract-based market models, demand response (DR) and energy storage (ES) have not been addressed. In this paper, market mechanism for trading DR and ES are proposed using the SC. The proposed model is a mixed integer quadratic program. Results demonstrate that DERs can trade their flexible energy products by using swing contracts, which is simple and transparent for implementation. SCs ensure that the flexible energy resources will get paid for providing energy flexibility capacity besides the energy costs when scheduled.