Demand-side flexibility management or more simply demand-side management (DSM) is a combination of activities and policies that encourages consumers to har-ness the potential of DSF in order to help decarbonize the energy production sector.
There are different types of consumers like commercial, industrial, and residential con-sumers. The scope of this thesis is limited to residential consumers who can utilize DSM. There are many definitions of DSM in the literature, but the most comprehen-sive definition of DSM is provided in [10] as following:
“DSM encompasses systematic activities at the interplay between grid op-erator and electricity consumer aiming at changing the amount and/or timing of the consumer’s use of electricity in order to increase grid per-formance and consumer benefits. DSM activities on the grid operator side involve the assessment of the need for load adjustment and the creation of financial incentives for the consumer, while the consumer reacts to these financial incentives and performs the actual physical load adjustment op-erations.”
There are number of objectives and benefits of DSM compiled by U.S. department of energy as following [11]:
Reduction of greenhouse gas emissions by helping the transformation of en-ergy sector
Minimization of fuel imports that will help countries economically
Stabilization of grid due to the integration of VRE sources
Active role of consumers in electricity markets
Reduction of electricity bills for consumers
Reduction of investment by utility companies to maintain the stability of grid by reducing the peak load demand
Increasing the efficiency of electric appliances
Maintaining the reliability of power distribution system
The DSM is further classified into energy efficiency and demand response as shown in Figure 6.
Figure 6. Demand-side management categories and activities [12]
2.1.1 Types of loads
The prospective electric appliances (loads) intended to use in DSM programs can be classified into two types such as deferrable loads and adjustable loads [13] also known as flexible loads or flexible resources. The deferrable loads are those which can be rescheduled or those which provide the capability of shifting energy consumption to some other time. The examples of deferrable loads in a residential building includes washing machines and electric vehicles. However, the consumer needs to define some constraints or deadlines for deferrable loads in order to make sure that the DSM pro-gram is not affecting the daily lives of the consumer. On the other hand, the adjustable loads are those which have different energy consumption levels and the consumer can change the consumption behaviour according to the requirements. The electric
appli-ances that provides heating or cooling in the residential buildings are the classic ex-amples of adjustable loads. However, the DSM programs should not influence on the comfort level of consumers. This is the reason that the consumers need to define the maximum and minimum consumption levels for adjustable loads to maintain the com-fort level.
2.1.2 Energy Efficiency
One of the DSM programs’ objective is to transform the existing less energy efficient appliances present in a household to more energy efficient. Energy Efficiency (EE) is a way to manufacture electric appliances so that they waste less energy to do the same task2. It involves the introduction of efficient electric appliances as well as modern building designs through which the usage of energy can be minimized without affect-ing the comfort levels. The energy efficient appliances includes, for example, LEDs for lighting in the house, electric vehicles to replace traditional fuel based vehicles for transportation, and efficient heat pumps to maintain the temperature inside the build-ing. Similarly, in addition to energy efficient appliances, the architecture designs can include the inclusion of VRE sources to make buildings net zero-carbon emission sources [14].
2.1.3 Demand Response
Demand response (DR) is the class of DSM in which the consumers agree to inten-tionally change the consumption behaviour of the electric energy based on either real time pricing of electricity or incentives paid by the grid operator. The U.S. Department of Energy defines DR in the following way:
“Demand response is a tariff or program established to motivate changes in electric use by end-use customers in response to changes in the price of electricity over time, or to give incentive payments designed to induce
2 https://www.eesi.org/topics/energy-efficiency/description
lower electricity use at times of high market prices or when grid reliability is jeopardized.” [11]
DR programs are further categorized into two classes as shown in Figure 6:
Price-based DR (Nondispatchable)
Incentive-based DR (Dispatchable) 2.1.4 Price-based DR
The price-based DR programs depend on different methods that electricity utility com-panies utilize for billing purposes. The traditional electricity utility comcom-panies follow two methods to charge consumers for the electric energy they use [15]. One method is flat-rate billing in which the consumer is charged a fixed price per unit (kWh) energy and the utility companies usually charge consumers for the whole month. Another method is tiered-rate billing which has different threshold levels for different prices per unit energy. In the latter method, the rate of electricity can also be different ac-cording to the seasons, for example, in winters the prices of electricity can be different as compared to summer.
In new electricity markets [11], the time varying pricing of electricity usage enables the price-based DR programs. There are mainly three most popular time varying bill-ing methods named as time-of-use pricbill-ing (ToUP), critical-peak pricbill-ing (CPP), and real-time pricing (RTP) [16]. In ToUP, the whole day is divided into different periods based on forecasted load on grid. The day is divided into peak hours when the gap between supply and demand is very less, mid-peak hours when load is relatively mod-erate, and off-peak hours when the supply is greater than demand. In CPP, the utility company decides the price of electricity based on forecasted critical future events which can jeopardize the grid stability, for example, the events like Christmas when the demand of electricity can increase or a time during the year when the demand of heating or cooling is increased. In RTP, the pricing is decided for very short intervals like hours based on real-time load on grid. These different dynamic or time varying pricing can be used to give benefits such as lower cost of electricity to consumers if they agree to participate in the DR programs.
2.1.5 Incentive-based DR
The incentive based DR programs rely on the consumption behaviour of consumers.
These type of DR programs encourage consumers to modify their load profiles volun-tarily but in some programs, the consumers may receive penalty if they do not follow the signals of utility company. The consumers usually receive some sort of incentives to participate in incentive-based DR programs [11].
There are different ways to participate in incentive-based DR programs generally known as direct load control, interruptible or curtailable, demand bidding, and ancil-lary services programs [16]. In direct load control DR programs, the utility companies has direct control over electric appliances. However, this method requires the installa-tion of smart controllers that utility companies use to shift the load or turn on/off the appliance intended for participation in the DR program. In interruptible or curtailable program, the utility company cannot directly control the consumption of electric ap-pliance, instead the utility company sends signals to consumers so that they can curtail the consumption between certain levels according to the agreement. In demand bid-ding programs, the consumers are allowed to bid the amount of load that they can curtail in the wholesale market and if the bid is approved, then the consumer has to follow that accordingly or otherwise the consumer might face penalties. Similarly, the ancillary services programs allow consumers to bid the amount of curtail-able load in a spot market and this load will be considered as operational reserve to help the utility company in the time of emergency or high demand. All these incentive-based DR pro-grams encourages consumers to participate and in return they get some monetary ben-efits in the form of incentives [13].
2.1.6 Approaches to Change Consumption Pattern
The residential consumers should have the proper infrastructure to utilize one of the DSM programs. There are different approaches available that can facilitate consumers to change their intended consumption pattern according to the different DR methods.
Load curtailment is one of the approaches used for adjustable load types such as heat pumps [17]. Similarly, load shifting is another approach widely discussed in the liter-ature. The load shifting approach is suitable for those type of loads which can be re-scheduled or postponed, and electric vehicle is one of such load type that can be used
in this approach. Both load curtailment and load shifting may affect the comfort levels of a residential consumer which might cause problems in daily routines [18].
There are two possible solutions to address this issue such as integration of energy storage systems (ESSs) and installation of local VRE sources. The ESSs can be used to store electric energy from the grid when the price of electricity is low and this cheap energy can be used during times when there is a need to either shift load or curtail load at the time of peak hours [19]. In the same way, local VRE sources can be used to produce low cost energy causing zero-carbon emissions. In this way, the deferrable load types can be optimized in such a way that there consumption timing matches with the time when the production of VRE is high. The extra energy produced from VRE can be stored in ESSs to use it for adjustable loads [20].