Impact of Time-Varying Demand Flexibility on Reserve Prices in Power Distribution Networks

Increasing renewable energy resources and their associated forecast errors and intermittent productions increase the need for operational reserves in a power system. For distribution networks, prices for securing reserves from the transmission system may become high. A potentially superior (and possibly cheaper) resource to secure these reserves might be flexible, deferrable, controllable loads within the distribution network such as air-conditioning devices, electric vehicles and water heaters. In this paper, we present a cooptimization formulation for a distribution network and use the formulation to explore impacts of demand-side flexibility on power system reserve prices under different scenarios. These scenarios correspond to different levels of flexibility embedded within the demand as well as different levels of elasticity costs, which reflect the willingness of consumers to offer demand flexibility. Empirical studies with the proposed optimization framework suggest that the reserve prices within a power distribution network are impacted by the dynamics of the flexible loads, elasticity costs, the costs of exporting energy and reserves from the external bulk transmission grid, and the amount of generation available from distributed energy resources (DERs) within the distribution network.