Demand response by dynamic demand control using frequency linked real‐time prices

Purpose – The purpose of this paper is to propose a novel demand response method for real‐time (RT) balancing markets, which relies on dynamic demand control (DDC) based on frequency linked RT prices. Design/methodology/approach – A RT balancing market, where the RT price varies inversely with the system frequency, is described. In such a market, producers and consumers can get the RT price, simply by monitoring the frequency deviations themselves. Air conditioning load, the main contributor of summer peaks, is selected for DDC. A physically based model of air conditioner load is taken to simulate the load control. A smart load controller is proposed that changes the thermostat setting with deviations in grid frequency/RT price. Simple examples are simulated to show the load reductions achieved by DDC in a single air conditioner, a group of large number of air conditioners and a RT market consisting of four generation companies and four distribution companies. Findings – The result of simulation on a single air conditioner shows that significant reduction in energy consumption can be achieved during severe frequency dips in a RT market. The results of simulation in an example of a RT market show that such load control not only results in better frequency control but also lowers the RT price of power. Practical implications – The demand control mechanism suggested in this paper can be applied to Indian market setting but its applicability to other markets might be limited due to differing, reliability standards, market rules, and regulatory framework. Originality/value – This paper finds that DDC by distribution companies based on RT price/frequency signal not only results in a significant benefit to these companies and consumers but also helps the system operator in frequency regulation. By making the demand‐side participate in frequency regulation, such control can potentially facilitate an increase in renewable energy portfolio.