The values of market-based demand response on improving power system reliability under extreme circumstances

Power system reliability faces serious challenges when supply shortage occurs because of unexpected generation or transmission line outages especially during extreme weather conditions. Alternative to conventional approaches that solicit aids from the generation side, operators can now leverage the demand-side resources through a variety of electricity market mechanisms to balance the active power and enhance system reliability. The benefits of the demand response (DR) have long been recognized in many works and empirical cases. Systematic analyses, however, have never been addressed to assess the values of the market-based DR for supporting system reliability. In this paper, a case study on the performance of DR in PJM Interconnections during the 2014 North American Polar Vortex is provided to highlight the significant contributions to improving system reliability and maintaining grid stability from DR programs. The unique merits in technical, economic and environmental aspects exhibited by DR during this extreme event verse conventional system-reliability-improving approaches are also demonstrated accordingly. Furthermore, we reveal the difference of DR programs driven by various existing market mechanisms after describing the fundamental DR functions. Values of various DR programs are also highlighted. At last, challenges and opportunities facing China on the design and implementation of DR programs during the transform from the monopoly scheme to an open electricity market during the power industry restructuring in recent years are also discussed.