A DSO-level contract market for conditional demand response

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This paper proposes a fixed-term (e.g., monthly) Demand Response (DR) contract market. Based on the outcomes of this market, the Distribution System Operator (DSO) pays DR aggregators to modify power consumption within a fixed window each day. Two contract types are introduced: Scheduled contracts require the DR daily, while conditional contracts require the DR after an activation signal from the DSO. Asymmetric block offers, introducing integer variables, are used to model DR with a rebound effect, potentially causing the DR offers to clear at a loss for the aggregators. Without an activation cost for conditional contracts, the DSO has the incentive to dispatch DR, despite consumer discomfort exceeding grid security benefits. Thus, the proposed market incorporates side-payments. A numerical study shows that among all DR services considered, the proposed market determines the optimal service for the whole system, ensuring the profitability of each market participant.
Original languageEnglish
Title of host publicationProceedings of IEEE PES PowerTech 2019
Number of pages6
Publication date2020
ISBN (Electronic)978-1-5386-4722-6
Publication statusPublished - 2020
Event13th IEEE PowerTech Milano 2019: Leading innovation for energy transition - Bovisa Campus of Politecnico di Milano, Milano, Italy
Duration: 23 Jun 201927 Jun 2019
Conference number: 13


Conference13th IEEE PowerTech Milano 2019
LocationBovisa Campus of Politecnico di Milano
OtherPowerTech is the anchor conference of the IEEE Power & Energy Society (PES) in Europe
Internet address


  • Electricity market
  • Fixed-term contract
  • Conditional demand response
  • Asymmetric block offers
  • Side-payment


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