A novel incentive-based retail demand response program for collaborative participation of small customers

Integration of aggregated demand response into the wholesale electricity market is an emerging field of research. Contrary to conventional service providers, most of the demand side participants act voluntarily. However, due to wholesale market regulations, reliable and effective participation of huge numbers of customers is a vital task for aggregators. The existing retail programs aim to motivate customers to take part in events in return for static or individual performance-based incentives. These programs do not focus on engaging customers to act in a collaborative way and therefore have limited effectiveness. This study proposes a novel retail demand response program in which the incentives are dependent on the aggregated performance of participants. Considering the existing wholesale and retail market structures together with demand response aggregator responsibilities, an adaptable program is developed for more effective performance and indirect collaboration of customers. The contribution of the program is compared with a number of different DR programs adopting concepts from game theory.