Critical Analysis of the Profitability of Demand Response for End-Consumers and Aggregators with Flat-Rate Retail Pricing

Abstract

Aggregators are considered essential to extend demand response (DR) to small residential and service sector consumers. Both sectors currently have untapped load flexibility, which is considered key to support renewable resource integration. Aggregators can offer this flexibility in bulk to other power system parties. This paper addresses the question under which conditions DR can be profitable for both aggregators and end-consumers. The paper builds further on existing research that shows end-consumer preference for flat-rate tariffs. The aim is to find the range of flat-rate retail prices for different photovoltaic (PV) feed-in-Tariffs which make DR profitable for both aggregator and end-consumers. For this purpose, an optimisation model which minimises costs through load scheduling is presented. The model is applied using two approaches: optimising from aggregator's and from end-consumers' perspective. The results show that only the aggregator's perspective yields a range of flat-rate retail prices that are profitable for both actors. However, both the price range and the expected profits of DR are small.