Demand bidding vs. demand response for industrial electrical loads

We investigate a novel optimal demand bidding model for industrial loads based on an extended optimal power flow problem for the day-ahead market. The objective function accounts for generation costs and revenue resulting from the sale of products made by the bidder using electricity. As a bidding entity, the industrial load participates in electricity price formation, and is described using a model whose parameters can be determined mostly from public information. Constraints specific to industrial loads, such as satisfying product demand, are also included. The model is validated using simulations of a modified IEEE 24-bus reliability test case with a chlor-alkali plant as the load entity. We find that the proposed participation model, which is simple enough to include in grid dispatch software, performs well relative to other demand-side management strategies such as price-based demand response and cooperative scheduling of industrial load by the grid operator. •Demand bidding model for industrial loads based on an extended optimal power flow problem.•Representation of bidding loads expands on model constructs already used by U.S. independent system operators.•Model can promote active participation of industrial plants in wholesale power markets.•Extensive validation using chlor-alkali plant case study.