Demand Response in a Real-Time Balancing Market Clearing With Pay-As-Bid Pricing

The vast installation of intermittent energy sources (especially wind) has distorted the normal strict pattern of the net demand (demand minus RES production), increasing the importance of real-time balancing markets, which handle efficiently imbalances between supply and demand. In this paper, the incorporation of demand response bids within a real-time balancing market is modeled. The price signal, to which the demand responds, is a price derived from the total cost incurred by increasing or decreasing power of generation units, with a pay-as-bid pricing scheme. The demand price is defined implicitly as a function of the upward and downward supply offers. The proposed balancing market clearing model is formulated as a mixed complementarity problem. All inter-zonal and intra-zonal dc transmission constraints are incorporated to the problem, thus making it a problem of interregional balancing, and nodal prices are derived from its clearing. The credits/debits to generators for providing balancing energy are balanced in zonal and system level with the debits/credits of elastic and inelastic demand entities. The proposed model can be useful for designing future real-time balancing markets, in view of the forthcoming active participation of price-responsive demand and the significant RES penetration targets set by most countries.