IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v47y2015icp270-283.html
   My bibliography  Save this article

A review of demand side management business models in the electricity market

Author

Listed:
  • Behrangrad, Mahdi

Abstract

Demand side management (DSM) can be defined as modifications in the demand side energy consumption pattern to foster better efficiency and operations in electrical energy systems. DSM activities, which are classified into “energy efficiency (EE)” and “demand response (DR)” are becoming more popular due to technological advances in smart grids and electricity market deregulation. However, it can be argued that ensuring DSM sustainability requires creating suitable business models. Business models are influenced by different factors such as electricity market regulation, mechanisms, power system characteristics and infrastructure. The proliferation of smart grid infrastructure, distributed generation, intermittent renewable energy resources and energy storage devices has affected DSM business models considerably. Therefore, in this paper, possible business models for EE and DR providers in different electricity market segments are analyzed and reviewed. The analysis covers three types of characteristics: DSM transaction characteristics, renewable energy correlation and DSM load control characteristics. In DSM transaction characteristics, the value proposition of DSM such as added value offered to the DSM purchaser and transaction triggers are discussed. In renewable energy correlation, the effect of increased renewable energy penetration on the business model is evaluated. In DSM load control characteristics, load control and aggregation aspects such as response speed, duration, advance notice, location sensitivity and actual usage frequency are analyzed.

Suggested Citation

  • Behrangrad, Mahdi, 2015. "A review of demand side management business models in the electricity market," Renewable and Sustainable Energy Reviews, Elsevier, vol. 47(C), pages 270-283.
    • Handle: RePEc:eee:rensus:v:47:y:2015:i:c:p:270-283
    DOI: 10.1016/j.rser.2015.03.033
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032115001860
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.rser.2015.03.033?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Bertoldi, Paolo & Huld, Thomas, 2006. "Tradable certificates for renewable electricity and energy savings," Energy Policy, Elsevier, vol. 34(2), pages 212-222, January.
    2. Strauss, Todd, 1994. "Perspectives on interrruptible electric tariffs," Utilities Policy, Elsevier, vol. 4(2), pages 165-172, April.
    3. Li, Canbing & Shi, Haiqing & Cao, Yijia & Wang, Jianhui & Kuang, Yonghong & Tan, Yi & Wei, Jing, 2015. "Comprehensive review of renewable energy curtailment and avoidance: A specific example in China," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 1067-1079.
    4. Pina, André & Silva, Carlos & Ferrão, Paulo, 2012. "The impact of demand side management strategies in the penetration of renewable electricity," Energy, Elsevier, vol. 41(1), pages 128-137.
    5. O׳Connell, Niamh & Pinson, Pierre & Madsen, Henrik & O׳Malley, Mark, 2014. "Benefits and challenges of electrical demand response: A critical review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 686-699.
    6. Battke, Benedikt & Schmidt, Tobias S. & Grosspietsch, David & Hoffmann, Volker H., 2013. "A review and probabilistic model of lifecycle costs of stationary batteries in multiple applications," Renewable and Sustainable Energy Reviews, Elsevier, vol. 25(C), pages 240-250.
    7. Feuerriegel, Stefan & Neumann, Dirk, 2014. "Measuring the financial impact of demand response for electricity retailers," Energy Policy, Elsevier, vol. 65(C), pages 359-368.
    8. Peng, Minghong & Liu, Lian & Jiang, Chuanwen, 2012. "A review on the economic dispatch and risk management of the large-scale plug-in electric vehicles (PHEVs)-penetrated power systems," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(3), pages 1508-1515.
    9. Friege, Jonas & Chappin, Emile, 2014. "Modelling decisions on energy-efficient renovations: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 39(C), pages 196-208.
    10. Warren, Peter, 2014. "A review of demand-side management policy in the UK," Renewable and Sustainable Energy Reviews, Elsevier, vol. 29(C), pages 941-951.
    11. Aghaei, Jamshid & Alizadeh, Mohammad-Iman, 2013. "Demand response in smart electricity grids equipped with renewable energy sources: A review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 18(C), pages 64-72.
    12. Rae, Callum & Bradley, Fiona, 2012. "Energy autonomy in sustainable communities—A review of key issues," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(9), pages 6497-6506.
    13. Behrangrad, Mahdi & Sugihara, Hideharu & Funaki, Tsuyoshi, 2011. "Effect of optimal spinning reserve requirement on system pollution emission considering reserve supplying demand response in the electricity market," Applied Energy, Elsevier, vol. 88(7), pages 2548-2558, July.
    14. Dehghanpour, Kaveh & Afsharnia, Saeed, 2015. "Electrical demand side contribution to frequency control in power systems: a review on technical aspects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 41(C), pages 1267-1276.
    15. Shayesteh, E. & Yousefi, A. & Parsa Moghaddam, M., 2010. "A probabilistic risk-based approach for spinning reserve provision using day-ahead demand response program," Energy, Elsevier, vol. 35(5), pages 1908-1915.
    16. Strbac, Goran, 2008. "Demand side management: Benefits and challenges," Energy Policy, Elsevier, vol. 36(12), pages 4419-4426, December.
    17. Herter, Karen, 2007. "Residential implementation of critical-peak pricing of electricity," Energy Policy, Elsevier, vol. 35(4), pages 2121-2130, April.
    18. Chauhan, Anurag & Saini, R.P., 2014. "A review on Integrated Renewable Energy System based power generation for stand-alone applications: Configurations, storage options, sizing methodologies and control," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 99-120.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Alasseri, Rajeev & Tripathi, Ashish & Joji Rao, T. & Sreekanth, K.J., 2017. "A review on implementation strategies for demand side management (DSM) in Kuwait through incentive-based demand response programs," Renewable and Sustainable Energy Reviews, Elsevier, vol. 77(C), pages 617-635.
    2. Leinauer, Christina & Schott, Paul & Fridgen, Gilbert & Keller, Robert & Ollig, Philipp & Weibelzahl, Martin, 2022. "Obstacles to demand response: Why industrial companies do not adapt their power consumption to volatile power generation," Energy Policy, Elsevier, vol. 165(C).
    3. Tahir, Muhammad Faizan & Chen, Haoyong & Khan, Asad & Javed, Muhammad Sufyan & Cheema, Khalid Mehmood & Laraik, Noman Ali, 2020. "Significance of demand response in light of current pilot projects in China and devising a problem solution for future advancements," Technology in Society, Elsevier, vol. 63(C).
    4. Talari, Saber & Shafie-khah, Miadreza & Osório, Gerardo J. & Aghaei, Jamshid & Catalão, João P.S., 2018. "Stochastic modelling of renewable energy sources from operators' point-of-view: A survey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 1953-1965.
    5. Märkle-Huß, Joscha & Feuerriegel, Stefan & Neumann, Dirk, 2018. "Large-scale demand response and its implications for spot prices, load and policies: Insights from the German-Austrian electricity market," Applied Energy, Elsevier, vol. 210(C), pages 1290-1298.
    6. Yang, Changhui & Meng, Chen & Zhou, Kaile, 2018. "Residential electricity pricing in China: The context of price-based demand response," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2870-2878.
    7. Lund, Peter D. & Lindgren, Juuso & Mikkola, Jani & Salpakari, Jyri, 2015. "Review of energy system flexibility measures to enable high levels of variable renewable electricity," Renewable and Sustainable Energy Reviews, Elsevier, vol. 45(C), pages 785-807.
    8. Li, Bosong & Shen, Jingshuang & Wang, Xu & Jiang, Chuanwen, 2016. "From controllable loads to generalized demand-side resources: A review on developments of demand-side resources," Renewable and Sustainable Energy Reviews, Elsevier, vol. 53(C), pages 936-944.
    9. Feuerriegel, Stefan & Neumann, Dirk, 2016. "Integration scenarios of Demand Response into electricity markets: Load shifting, financial savings and policy implications," Energy Policy, Elsevier, vol. 96(C), pages 231-240.
    10. McPherson, Madeleine & Stoll, Brady, 2020. "Demand response for variable renewable energy integration: A proposed approach and its impacts," Energy, Elsevier, vol. 197(C).
    11. Meyabadi, A. Fattahi & Deihimi, M.H., 2017. "A review of demand-side management: Reconsidering theoretical framework," Renewable and Sustainable Energy Reviews, Elsevier, vol. 80(C), pages 367-379.
    12. Wang, Tian & Deng, Shiming, 2019. "Multi-Period energy procurement policies for smart-grid communities with deferrable demand and supplementary uncertain power supplies," Omega, Elsevier, vol. 89(C), pages 212-226.
    13. Paterakis, Nikolaos G. & Erdinç, Ozan & Catalão, João P.S., 2017. "An overview of Demand Response: Key-elements and international experience," Renewable and Sustainable Energy Reviews, Elsevier, vol. 69(C), pages 871-891.
    14. Bertsch, Valentin & Harold, Jason & Fell, Harrison, 2019. "Consumer preferences for end-use specific curtailable electricity contracts on household appliances during peak load hours," Papers WP632, Economic and Social Research Institute (ESRI).
    15. Feuerriegel, Stefan & Bodenbenner, Philipp & Neumann, Dirk, 2016. "Value and granularity of ICT and smart meter data in demand response systems," Energy Economics, Elsevier, vol. 54(C), pages 1-10.
    16. Zehir, Mustafa Alparslan & Batman, Alp & Bagriyanik, Mustafa, 2016. "Review and comparison of demand response options for more effective use of renewable energy at consumer level," Renewable and Sustainable Energy Reviews, Elsevier, vol. 56(C), pages 631-642.
    17. Haider, Haider Tarish & See, Ong Hang & Elmenreich, Wilfried, 2016. "A review of residential demand response of smart grid," Renewable and Sustainable Energy Reviews, Elsevier, vol. 59(C), pages 166-178.
    18. Voulis, Nina & van Etten, Max J.J. & Chappin, Émile J.L. & Warnier, Martijn & Brazier, Frances M.T., 2019. "Rethinking European energy taxation to incentivise consumer demand response participation," Energy Policy, Elsevier, vol. 124(C), pages 156-168.
    19. da Fonseca, André L.A. & Chvatal, Karin M.S. & Fernandes, Ricardo A.S., 2021. "Thermal comfort maintenance in demand response programs: A critical review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 141(C).
    20. Gils, Hans Christian, 2016. "Economic potential for future demand response in Germany – Modeling approach and case study," Applied Energy, Elsevier, vol. 162(C), pages 401-415.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:rensus:v:47:y:2015:i:c:p:270-283. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.