Simultaneous Procurement of Demand Response Provisions in Energy and Spinning Reserve Markets

Demand Response (DR) is an important tool for Independent System Operators (ISO) for reliable operation of electricity markets, and there has been considerable interest from load-side market participants to offer their services for DR provisions. In this environment, the ISO needs to develop effective mathematical models for procurement of DR so as to maximize its benefits, such as reducing the peak demand, regulating electricity price shocks, and mitigating market power. In this paper, a new mathematical model for a Locational Marginal Price based, loss included, day-ahead, co-optimized, energy and spinning reserve market including DR provisions, is proposed. The proposed model includes a new proposition for load-side participants to submit price responsive demand (PRD) and load curtailment based DR bids simultaneously, in a unified market framework. Case studies considering DR providers participating in energy market only, in both energy and spinning reserve markets, and in spinning reserve market only, are presented, which examine the impact on system operation, market prices, and DR provider's benefits. The proposed model is tested on the IEEE Reliability Test System to demonstrate its functionalities and the results clearly justify the merits of simultaneous consideration of PRD bids and load curtailment based DR offers in a co-optimized energy and spinning reserve market.