Energy-only markets with deferrable demand (original) (raw)

In addition to its adverse impacts on power system operations, the large-scale integration of renewable energy sources presents market design challenges as it exacerbates the missing money problem by moving value from energy to capacity markets. Energy-only markets have been touted as a mechanism for alleviating the missing money problem, although demand response is widely recognized as the ultimate solution. In this paper we analyze the benefits of demand response and an energyonly market design on short-term operations and long-term investment, as well as the result of overlapping an energy-only market design in a market with active demand response. We use a multi-stage stochastic program to characterize the real-time and long-term market equilibrium, and a multi-stage stochastic unit commitment model followed by a real-time market to analyze the impact of operating reserve demand curves on day-ahead markets. Our model is applied on a case study of wind and demand response integration in Germany.