Proposing an Hourly Dynamic Wind Signal as an Environmental Incentive for Demand Response

Abstract

Demand Response (DR) is expected to play a crucial role in balancing supply and demand in future smart grids with increased proportion of electricity from renewable sources. However, previous studies on price-based DR programs have shown that there is a substantial need to strengthen the incentive models in order to achieve sufficient end-user response. In addition, recent studies are starting to explore alternative incentives based on environmental performance as a support to dynamic pricing tariffs. In this paper, we investigate in the potential of using a dynamic wind signal, reflecting the hourly variations in wind power generation, as an environmental incentive for load shift in DR programs. A wind signal is constructed based on Swedish electricity generation data for 2014, and intraday and seasonally patterns of wind power generation are analyzed with respect to hourly electricity spot prices. The results show that a wind signal is supportive to the economic incentive of a dynamic price signal to stimulate intraday load shift by end-use customers; shifting electricity consumption from hours of high price and low wind power generation to hours of low price and high wind power generation, leading to both consumer cost-savings and reduced climate impact in the long term.