Residential demand response in the European power system: No significant impact on capacity expansion and cost savings

Abstract

Direct Load Control (DLC) is a demand response strategy in which customers receive compensation from utilities in return for permitting them to regulate the operation of specific equipment. This paper analyzes the impacts of DLC programs on the transition to renewable energy within the European electricity system towards 2060. The study quantifies the achievable hourly potential for DLC across Europe in the residential sector. By implementing and developing a DLC module within the stochastic capacity expansion model EMPIRE, we investigate how costs, long-term investments, and long-term marginal prices are affected by residential DLC participation rates. The research utilizes a comprehensive DLC dataset, including ten appliances such as electric vehicles, heat pumps, refrigeration, and others. This dataset serves as the basis for creating four storylines to investigate the integration of these programs into the European electricity system. The results indicate that residential DLC programs have some impact on grid-battery deployment, PV plant penetration, and electricity prices. In the best-case scenario, involving ambitious participation of residential loads in DLC programs without compensation, cost savings are about 1% versus not introducing DLC. The findings contribute to understanding the value of demand response programs in Europe, indicating that the savings they bring might not be sufficient to provide enough incentives or compensation for widespread participation in such programs. That is, from a long-term investment or capacity expansion perspective, it may not be worthwhile to soley include residential demand response in the planning of the electricity system.