Demand Response as a Service: Clearing Multiple Distribution-Level Markets

The uncertain and non-dispatchable nature of renewable energy sources renders Demand Response (DR) a critical component of modern electricity distribution systems. Demand Response (DR) service provision takes place via aggregators and special distribution-level markets (e.g., flexibility markets), where small, distributed DR resources, such as building energy management systems, electric vehicle charging stations, micro-generation and storage, connected to the low-voltage distribution grid, offer DR services. In such systems, energy balancing (and thus, also DR decisions) have to be made close to real-time. Thus, market clearing algorithms for DR service provision must fulfill several requirements related to the efficiency of their operation. More specifically, a DR market clearing algorithm needs to be optimal in terms of cost-efficiency, scalable in terms of number of assets and locations, and able to satisfy real-time constraints. In order to cope with these challenges, this article presents a distributed DR market clearing algorithm based on Lagrangian decomposition, combined with an optimal cloud resource allocation algorithm for assigning the required computation power. A heuristic algorithm is also presented, able to achieve a near-optimal solution, within negligible computational time. Simulations, performed on a testbed, demonstrate the computational burden introduced by various DR models, as well as the heuristic algorithm's near-optimal performance. The resource allocation algorithm is able to service multiple DR requests (e.g., in multiple distribution networks), and minimize the cost of computational resources while respecting the execution time constraints of each request. This enables third parties to offer cost-efficient and competitive DR operation as a service.