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Electricity production from renewable energy resources such as wind energy and photovoltaics is variable. Integration of these intermittent resources into the electricity system leads to new challenges in how to manage imbalance between supply and demand on the grid. One way to meet these challenges is to develop so-called smart grid solutions. One idea, called demand response, is to adjust the amount or timing of energy consumption, e.g. by control of household appliances, to provide flexibility that could be used to balance the grid. In aggregate, when applied to many units across the system, large volumes of energy could be made available when needed and this grid flexibility can be used as a product on the electricity regulation market. Despite the potential benefits, the number of demand response bids is currently low. The aim of this thesis is to identify barriers in the Swedish regulation market, and togive Sweden's transmission system operator, Svenska kraftnät, recommendations on how to facilitate implementations of the technique. This has been done throughliterature studies and a wide range of interviews with people within the electricity market sector. The results indicate that a combination of several elements in the complex energy system impede the introduction of demand response. The main issues are related to market regulations and profitability difficulties. The authors recommend that Svenska kraftnät lowers the minimum bid size in all of the Swedish bidding areas, and adjusts the balance responsibility agreement and the system of balancing settlement. |
