Participation of demand response aggregators in electricity markets: Optimal portfolio management

Demand response (DR) is a versatile way of providing flexibility in power systems. In order to manage the flexibility of a large number of scattered DR resources, in the context of electricity markets, they must be aggregated by a new participant called the DR aggregator. This paper presents an optimization model to determine the optimal operation of a DR aggregator that manages a portfolio of DR programs in wholesale electricity markets. The aggregator is considered to be a strategic participant in the real-time market. The portfolio is composed of various contracts of load curtailment and flexible loads that can be executed for hourly load change. Uncertainty of market prices and balancing requirements are represented through a set of scenarios based on historical data. The proposed model is a stochastic bi-level mathematical program that is reformulated as a mixed-integer linear program. Several case studies with numerical results are presented.