Impact of price responsive demand on PJM Real-time/Look-ahead markets

One of the major key wholesale market competition strategies proposed by Federal Energy Regulatory Commission is to promote demand response resources as a source of energy and ancillary services (AS). As the third generation in the development of DR programs, price responsive demand (PRD) refers to the process by which residential and small commercial consumers voluntarily adjust their consumption according to dynamic retail price changes. From the perspective of RTOs/ISOs, significant penetration of PRD will also bring about substantial benefits to operational reliability, system planning and market operation. To help understand and quantify the impacts of the PRD on PJM market systems, PJM and Alstom Grid have been working on a PRD prototype project since May 2010. The PRD study is specifically designed to evaluate the impact of PRD program on many aspects of PJM Look-Ahead/Real-Time system operations and market clearing, including resource commitment/dispatch, security constraint management, and energy/AS pricing, particularly in shortage pricing context. The results demonstrate that PRD will help improve the efficiency of market operations and system reliability significantly.