Incorporation of demand response resources in resource investment analysis

The use of demand-side resources, in general, and demand response resources (DRRs), in particular, has increased over the last few years with rising fuel prices and growing environmental concerns. Integration of demand response resources in the competitive electricity markets impacts resource investment decisions on the supply- as well as the demand-side. There is a need to understand and assess the impacts of DRRs on resource investment strategies. We propose an analytical framework which may be deployed for the assessment of supply- and demand-side resource investment strategies. The salient features of the framework is the explicit representation of the interdependence between the operation of electricity markets and power system, and the resource investment decisions, as well as incorporation of DRRs in the models used in the framework. We design the framework so as to account for the uncertainty associated with the load and the available capacity of the resources. Efficient computational schemes are used for evaluating the uncertain market outcomes. We illustrate the application of the framework through representative simulation results.