Claire Bergaentzlé (UPMF - Grenoble)

This article uses POLES database and linear optimization modelling methodology in order to evaluate the economic impact of generalizing demand response (DR) programs on electricity generators’ revenue. This study brings new insights relative to (1) the loss of revenue to be expected by generators when large scale demand-side management measures are implemented as well as to (2) new profit potentials due to demand shifting. This study shows DR creates new cost recovery risks to both peak generators and infra marginal technologies, further amplified by fatal energies. In addition the study reveals several outcomes of a greater interest. We firstly show the missing money issue is restricted to limited capacity countries only. Additionally, we show once extreme peakers are avoided, the disincentive to implement increasing DR objectives is limited. Demand-side management can consequently drive efficiency gains without constraining generators’ profits. Secondly, the study of shifting effects show that, again, only limited capacity countries can create new profit solutions. We show that shifting effects must be controlled in order to avoid the system reliability be jeopardized. At last, the model shows after the quantity of energy shifted from peak period to post peak period reaches a 30% threshold, no additional profit opportunity can be expected. Only efficiency losses are observed. We conclude a load management strategy should be backed by appropriate measures both in terms of peak-load reduction objectives and control of shifting effects and in terms of accompanying framework for peakers. The latter being key point since the lack of revenue for peak technologies brings new concerns in terms of reliability in systems with growing fluctuating energies. Keywords: Demand-side management ; Missing money ; Peak-load shedding ; Shifting effects.