Methodology for the identification, evaluation and prioritization of market handicaps which prevent the implementation of Demand Response: Application to European electricity markets

Abstract

This paper presents a methodology for the identification, analysis and comparative assessment of the handicaps which nowadays prevent the higher implementation of Demand Response (DR) in the electricity market. Its application provides a hierarchical organization of handicaps from the most critical to the less critical and then, from the easiest to the most difficult to overcome. This makes possible to determine which barriers would be a priority, which may indicate the direction of regulatory changes to properly address these handicaps and so, stimulating a higher participation of the demand side in electricity markets. After applying the methodology to three European countries, 34 handicaps have been identified, analysing which of these handicaps affect such stakeholders as grid operators, retailers and customers and how these stakeholders are affected. For each handicap, the criticality and difficulty to overcome the different handicaps have been studied, based on detailed information coming from personal interviews to experts representing the different stakeholders in the electricity trading chain. Regulatory barriers have been identified as the most critical and difficult to overcome. Together with regulatory changes, the promotion of aggregators and the training of customers on DR applications are some of the most significant initiatives.