Sustainable power demand-side regulation: Comparison
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Demand-side management provides important opportunities to integrate renewable sources and enhance the flexibility of urban power systems. With the continuous advancement of the smart grid and electricity market reform, the potential for residential consumers to participate in energy demand response is significantly enhanced. However, not enough is known about the public perception of energy demand response, and how sociopsychological and external factors could affect public willingness to participate.

  • Energy demand side
  • power system security

1. Background

Renewable energy has been increasingly integrated into clean electricity generation, which helps to reduce the dependence on fossil fuel and greenhouse gas emissions. According to the report from REN21, the installed capacity of renewable energy has grown to over 33% of the global total installed capacity, and the installed renewable electricity capacity at the end of 2018 was sufficient to supply approximately 26.2% of global electricity production [1]. The Zero-Carbon China report states that China’s total power demand will increase from about 6 trillion kWh in 2016 to about 15 trillion kWh in 2050 in order to achieve a zero-carbon economy, of which nearly 70% of its electricity will come from solar and wind energy [2]. With the increase of renewable sources penetration in electricity generation, the intermittent and limited controllability of renewable energy generation restricts the security, reliability, and sustainability of the power systems [3,4]. Power systems should be more flexible to maintain economic profitability, and operation safety [5].

Renewable energy has been increasingly integrated into clean electricity generation, which helps to reduce the dependence on fossil fuel and greenhouse gas emissions. According to the report from REN21, the installed capacity of renewable energy has grown to over 33% of the global total installed capacity, and the installed renewable electricity capacity at the end of 2018 was sufficient to supply approximately 26.2% of global electricity production [1]. The Zero-Carbon China report states that China’s total power demand will increase from about 6 trillion kWh in 2016 to about 15 trillion kWh in 2050 in order to achieve a zero-carbon economy, of which nearly 70% of its electricity will come from solar and wind energy [2]. With the increase of renewable sources penetration in electricity generation, the intermittent and limited controllability of renewable energy generation restricts the security, reliability, and sustainability of the power systems [3][4]. Power systems should be more flexible to maintain economic profitability, and operation safety [5].

Demand-side management (DSM), as an important controllable virtual resource, has the advantages of low marginal cost and short response time, and can effectively overcome the randomness of renewable energy generation and the adverse impacts of power supply and demand mismatch on power system [6,7]. Furthermore, by increasing end-user participation and responsiveness, it has greater flexibility than expanding power generation and distribution capabilities, and affects consumer demand for greater technical and environmental efficiency [8,9]. Therefore, demand response is considered as the most promising option for integrating renewable sources and increasing the flexibility of the power system [10,11]. It is noticeable that the market mechanism significantly affects the development of demand response. Only by giving full play to the role of the market and intelligently managing the demand-side can the potential of demand response be fully realized [12,13]. With the advancement of China’s smart grid construction and power marketization reforms, and the continuous improvement of domestic electrification, the ability for residents to participate in demand response is greatly stimulated [14,15].

Demand-side management (DSM), as an important controllable virtual resource, has the advantages of low marginal cost and short response time, and can effectively overcome the randomness of renewable energy generation and the adverse impacts of power supply and demand mismatch on power system [6][7]. Furthermore, by increasing end-user participation and responsiveness, it has greater flexibility than expanding power generation and distribution capabilities, and affects consumer demand for greater technical and environmental efficiency [8][9]. Therefore, demand response is considered as the most promising option for integrating renewable sources and increasing the flexibility of the power system [10][11]. It is noticeable that the market mechanism significantly affects the development of demand response. Only by giving full play to the role of the market and intelligently managing the demand-side can the potential of demand response be fully realized [12][13]. With the advancement of China’s smart grid construction and power marketization reforms, and the continuous improvement of domestic electrification, the ability for residents to participate in demand response is greatly stimulated [14][15].

However, researches on the obstacles and challenges of demand response suggest that how to change residential energy consumption behaviors to achieve sufficient response has become a core part of the successful implementation of demand response management [16,17]. Although the concept of demand response is based on the assumption of rational decision-making by end-use customers, residential energy consumption behavior is often irrational and affected by numerous factors, such as values, daily habits, social norms, and personal preferences [18,19]. The factors of how public perception affects demand response should be investigated to develop efficient demand response strategies [20]. Thus, it is necessary to further analyze public attitudes towards demand response in combination with the factors affecting the residents’ energy consumption behavior.

However, researches on the obstacles and challenges of demand response suggest that how to change residential energy consumption behaviors to achieve sufficient response has become a core part of the successful implementation of demand response management [16][17]. Although the concept of demand response is based on the assumption of rational decision-making by end-use customers, residential energy consumption behavior is often irrational and affected by numerous factors, such as values, daily habits, social norms, and personal preferences [18][19]. The factors of how public perception affects demand response should be investigated to develop efficient demand response strategies [20]. Thus, it is necessary to further analyze public attitudes towards demand response in combination with the factors affecting the residents’ energy consumption behavior.

The aims of this research are twofold for sustainable power demand-side regulation. Firstly, public perceptions of energy demand response are measured from different perspectives, including public willingness to participate (WTP) from material and spiritual incentives, public preferences for different participation forms and measures, and public perception of the difficulty of participating in energy demand response. Secondly, combining with economic, social, and psychological drivers of energy consumption behaviors, this research quantitatively analyzes the relationships between major influencing factors and public WTP in energy demand response. This research divides these factors into five categories, including socio-demographic characteristics, energy-saving attitudes, behavior abilities, external motivating factors, and energy-saving technologies. In this way, it is possible to provide a panorama of the public responsiveness to energy demand response, thereby assessing the potential of residential demand response, and to propose a policy framework for the successful implementation of residential demand response.

2. Concepts and Benefits behind Demand Response

Demand response refers to the concept that “consumers voluntarily provide load reduction based on electricity price changes over time; or incentive payments for inducing customers to reduce electricity consumption when the wholesale market is expensive or the reliability of the power systems is jeopardized” [8,21]. Demand response aims to encourage consumers to provide load reduction during peak periods to ensure the reliability of power system operations, and it can be roughly divided into two categories: Price-based programs (PBP) and incentive-based programs (IBP). PBP refers to flattening the demand curve by responding to changes in electricity prices over time [8]. The choice of the price includes time of use pricing (TOU), real-time pricing (RTP) and critical peak pricing (CPP), etc. [22]. IBP refers to providing incentive payment for users to participate in slashing power during peak periods. IBP can be further divided into classical IBP and market-based IBP. Classical IBP includes direct load control (DLC), interruptible load (IL), etc. Market-based IBP includes demand-side bidding (DSB), emergency demand response (EDR), capacity market (CM), and ancillary service market solutions [8]. In addition, there are three types of actions that customers can choose in demand response. One is that customers can reduce the load power consumption during peak periods, and do not change load pattern during off-peak periods, such as adjusting the temperature of refrigerators and water heaters [4,21]. Secondly, customers shift load from peak periods to off-peak periods, such as avoiding the use of energy storage equipment, washing machines, and dishwashers during peak periods. Thirdly, the public is able to make access to electricity by distributed power generation, thereby limiting their dependence on the power grid [23].

Demand response refers to the concept that “consumers voluntarily provide load reduction based on electricity price changes over time; or incentive payments for inducing customers to reduce electricity consumption when the wholesale market is expensive or the reliability of the power systems is jeopardized” [8][21]. Demand response aims to encourage consumers to provide load reduction during peak periods to ensure the reliability of power system operations, and it can be roughly divided into two categories: Price-based programs (PBP) and incentive-based programs (IBP). PBP refers to flattening the demand curve by responding to changes in electricity prices over time [8]. The choice of the price includes time of use pricing (TOU), real-time pricing (RTP) and critical peak pricing (CPP), etc. [22]. IBP refers to providing incentive payment for users to participate in slashing power during peak periods. IBP can be further divided into classical IBP and market-based IBP. Classical IBP includes direct load control (DLC), interruptible load (IL), etc. Market-based IBP includes demand-side bidding (DSB), emergency demand response (EDR), capacity market (CM), and ancillary service market solutions [8]. In addition, there are three types of actions that customers can choose in demand response. One is that customers can reduce the load power consumption during peak periods, and do not change load pattern during off-peak periods, such as adjusting the temperature of refrigerators and water heaters [4][21]. Secondly, customers shift load from peak periods to off-peak periods, such as avoiding the use of energy storage equipment, washing machines, and dishwashers during peak periods. Thirdly, the public is able to make access to electricity by distributed power generation, thereby limiting their dependence on the power grid [23].

Potential benefits of demand response involve economic, environmental, and systematic reliability aspects. In terms of economy, demand response can get compensation and save electric bills for participants. For power systems, demand response can reduce the need for reserving capacity and alleviating grid congestion, thus delaying or avoiding the cost of grid reinforcement and investment in capacity reserve [24,25]. And demand response flattens the demand curve, further improving the effective utilization of existing infrastructure and reducing high supply costs during peak periods [26]. The overall operating costs of the distribution grid are reduced through demand response [27]. In addition, demand response can enable customers to respond to price signals and fairly reflect the actual costs of power generation and grids operation [21]. In terms of the environment, demand response can not only reduce power generation and improve energy efficiency [28,29], but also increase the portfolio capacity of a large number of uncontrollable renewables, thereby reducing greenhouse gas emissions and enhancing the environmental sustainability of the power systems [3,10]. In addition, demand response can also help increase consumer awareness of electricity consumption and indirectly affect carbon emissions [19]. In terms of reliability, through careful design on demand response programs, the generation, transmission, and distribution capacity can be cut down in a short time, thereby reducing the risk of network peaks and system crashes and ensuring the reliability of power system operation [26].

Potential benefits of demand response involve economic, environmental, and systematic reliability aspects. In terms of economy, demand response can get compensation and save electric bills for participants. For power systems, demand response can reduce the need for reserving capacity and alleviating grid congestion, thus delaying or avoiding the cost of grid reinforcement and investment in capacity reserve [24][25]. And demand response flattens the demand curve, further improving the effective utilization of existing infrastructure and reducing high supply costs during peak periods [26]. The overall operating costs of the distribution grid are reduced through demand response [27]. In addition, demand response can enable customers to respond to price signals and fairly reflect the actual costs of power generation and grids operation [21]. In terms of the environment, demand response can not only reduce power generation and improve energy efficiency [28][29], but also increase the portfolio capacity of a large number of uncontrollable renewables, thereby reducing greenhouse gas emissions and enhancing the environmental sustainability of the power systems [3][10]. In addition, demand response can also help increase consumer awareness of electricity consumption and indirectly affect carbon emissions [19]. In terms of reliability, through careful design on demand response programs, the generation, transmission, and distribution capacity can be cut down in a short time, thereby reducing the risk of network peaks and system crashes and ensuring the reliability of power system operation [26].

3. Barriers and Challenges for Demand-Side Management

Although demand response may bring potential benefits, there are still many barriers and challenges to achieving broad participation in demand response. For example, Good et al. divides the barriers to demand response to fundamental and secondary barriers [30]. Fundamental barriers could be classified as economic, social, and technological, whilst the secondary obstacles include anthropogenic institutions, system feedback, market rules, and physical constraints. Oconnell et al. believed that the key challenge of demand response is how to establish reliable control strategies and market frameworks, and one of the greatest challenges for demand response is the lack of experience [20].

The obstacles to demand response involve market, policy, and technology issues [31]. The major challenge is how to improve the end-use customers’ support and interest, because the effectiveness of demand response is ultimately limited by end-use customers’ response [17,19]. Because end-user customers (especially the household sector) often are not the economically rational decision-maker, it is difficult to predict responses using conventional economic models [20,32]. And for most consumers, electricity is seen as a service rather than a commodity, and the potential electricity bill that may be saved by the demand response may not be their main goal [21]. Apart from the limited rationality of end-users, factors affecting household energy consumption behaviors (such as socio-demographic characteristics, value, daily habits, and routines, lifestyles, et al.) are also important factors that limit public participation in demand response [19]. The effective implementation of demand response measures requires the productive mixture of mutually supporting elements by the competences, engagement, and devices [33].

The obstacles to demand response involve market, policy, and technology issues [31]. The major challenge is how to improve the end-use customers’ support and interest, because the effectiveness of demand response is ultimately limited by end-use customers’ response [17][19]. Because end-user customers (especially the household sector) often are not the economically rational decision-maker, it is difficult to predict responses using conventional economic models [20][32]. And for most consumers, electricity is seen as a service rather than a commodity, and the potential electricity bill that may be saved by the demand response may not be their main goal [21]. Apart from the limited rationality of end-users, factors affecting household energy consumption behaviors (such as socio-demographic characteristics, value, daily habits, and routines, lifestyles, et al.) are also important factors that limit public participation in demand response [19]. The effective implementation of demand response measures requires the productive mixture of mutually supporting elements by the competences, engagement, and devices [33].

4. Key Factors Governing Residential Electricity Demand Response

Numerous studies have investigated the factors that influence residential demand response, in order to efficiently understand user perceptions to demand response. The potential of different types of households for demand response programs is explored [9]. Setlhaolo et al. found that households can change electricity consumption based on changes in electricity prices and incentives, but whether participate in demand response ultimately depends on preferences for cost and inconvenience [34]. It is found that the potential of demand response was driven by the buildings and their systems, physical and contractual environments, and the behavior and preferences of occupants [35]. Gyamfi et al. stated that some residential customers, especially the rich, were slow to respond to price signals and did not even respond [36]. Previous researches reveal that although prices or incentives will promote residential responsiveness to a certain extent, costs may not be their main goal, due to the limited rationality of residential behaviors. The successful implementation of demand response requires greater understandings of the energy consumption behavior of residents from broad aspects of economics, socio-demographic, and psychology [37]. Economic aspect research has used prices and customer income as determinants of resident energy consumption, while socio-demographic and psychological studies have shown that energy consumption behaviors are affected by various factors, such as family characteristics, habits, attitudes, values, social norms, ability, etc. [3,38,39]. Horne and Kennedy indicated that the power of social norms could not only directly affect household electricity consumption, but also promote the integration of renewable sources in electricity generation by changing the usage time [40]. The relationship between the user’s response and family attitudes towards smart devices through a Belgian demand response trial was investigated [41].

Numerous studies have investigated the factors that influence residential demand response, in order to efficiently understand user perceptions to demand response. The potential of different types of households for demand response programs is explored [9]. Setlhaolo et al. found that households can change electricity consumption based on changes in electricity prices and incentives, but whether participate in demand response ultimately depends on preferences for cost and inconvenience [34]. It is found that the potential of demand response was driven by the buildings and their systems, physical and contractual environments, and the behavior and preferences of occupants [35]. Gyamfi et al. stated that some residential customers, especially the rich, were slow to respond to price signals and did not even respond [36]. Previous researches reveal that although prices or incentives will promote residential responsiveness to a certain extent, costs may not be their main goal, due to the limited rationality of residential behaviors. The successful implementation of demand response requires greater understandings of the energy consumption behavior of residents from broad aspects of economics, socio-demographic, and psychology [37]. Economic aspect research has used prices and customer income as determinants of resident energy consumption, while socio-demographic and psychological studies have shown that energy consumption behaviors are affected by various factors, such as family characteristics, habits, attitudes, values, social norms, ability, etc. [3][38][39]. Horne and Kennedy indicated that the power of social norms could not only directly affect household electricity consumption, but also promote the integration of renewable sources in electricity generation by changing the usage time [40]. The relationship between the user’s response and family attitudes towards smart devices through a Belgian demand response trial was investigated [41].

Based on the literature review, this study takes socio-demographic characteristics, energy-saving attitudes, behavior abilities, external motivating factors, and energy-saving technologies as the major influencing factors for public participation in demand response. Socio-demographic characteristics include opportunities and constraints on household energy consumption, such as age, the number of households, income, education level, etc. Energy-saving attitudes include factors that influence motivation for energy-saving behaviors, such as personal norms, energy-saving beliefs, energy-saving responsibilities, and awareness of consequences. Behavior ability reflects the individual’s past experience and future obstacles, including factors of behavior knowledge and behavior constraints. External motivating factors mainly refer to incentives, policies, regulations, rewards, compensation, that change energy consumption behavior. Energy-saving technologies refer to advanced technologies that change personal energy consumption behaviors, such as information feedback, intelligent control technologies, etc. [42,43].

Based on the literature review, this study takes socio-demographic characteristics, energy-saving attitudes, behavior abilities, external motivating factors, and energy-saving technologies as the major influencing factors for public participation in demand response. Socio-demographic characteristics include opportunities and constraints on household energy consumption, such as age, the number of households, income, education level, etc. Energy-saving attitudes include factors that influence motivation for energy-saving behaviors, such as personal norms, energy-saving beliefs, energy-saving responsibilities, and awareness of consequences. Behavior ability reflects the individual’s past experience and future obstacles, including factors of behavior knowledge and behavior constraints. External motivating factors mainly refer to incentives, policies, regulations, rewards, compensation, that change energy consumption behavior. Energy-saving technologies refer to advanced technologies that change personal energy consumption behaviors, such as information feedback, intelligent control technologies, etc. [42][43].

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