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Evaluation of benefits of active demand

O. Lago , P. Linares , M. Baron , A. Delnooz , C. Linke , A. Cronenberg

This document has as main objective the evaluation of benefits of Active Demand (AD) programs, and the comparison between the benefits to be obtained in different power systems. There will be another one within the project which will look also at the costs of deploying such a program. Theoretically, Active Demand programs can have impacts on system operation, system expansion and market efficiency (the last only applicable in liberalized market environments). By enabling customers to respond to price signals that reflect to a certain extent real operational costs (generation and/or network costs), savings in system operation can be achieved. Demand peaks, both local peaks in a particular area, and system peaks can be reduced, so the need for network investment, installed capacity in peaking units and capacity reserves is also reduced. Lastly, market-driven AD programs can allow an active participation of the demand side in the market and thereby achieve significant improvements in market efficiency. Taking into account a survey carried out among stakeholders, and also the expectations pointed out by the project team in D1.1, the benefits of AD considered in this report are reduced energy costs (reduction in costs due to lower prices or lower consumption and reduction in ancillary costs), reduced price volatility, more consumer choice, reduced loss of intermittent generation, improved quality of service (lower congestion and blackouts, improved grid operation), reduced network losses, reduced network investments, more security of supply (through higher contribution of DG and lower energy use) and reduction in pollutant emissions. However, not all these benefits could be quantified. In this report only the reduced generation costs, reduced pollutant emissions, reduced balancing costs, reduced network losses and reduced network investments due to the implementation of AD are quantified, using a simple methodology for different European countries. In order to quantify those benefits, four AD scenarios of reduction in peak demand and energy consumed were studied. The results obtained show that generation costs and network investments are the items which contribute most to AD benefits. Savings in generation costs are between 0.51% and 4.78% of the total system costs. The largest savings in generation are obtained in Spain and the lowest in Belgium. Finally, we should point out that, since electricity markets and their regulation in all EU member states are not exactly the same, the conditions for implementing AD based services may be different, at least under present circumstances. Consequently, there may be markets where the conclusions of this report may not be exactly applicable.


Funding entity: Comisión Europea. FP7 - Cooperation / Energy



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