Demand response in the domestic environment: An assessment of the potential of domestic heat pumps to provide ancillary services on the Dutch FCR market

Abstract

Due to the intermittent nature and increasing share of renewable energy, the need for flexibility in the electricity grid is increased. One of the many ways of creating flexibility is through demand response by domestic heat pumps. This research aims to investigate the potential for an aggregated portfolio of domestic heat pumps to deliver flexibility on the FCR market. To achieve this, a quantitative model is built in Python that combines historical frequency data with heat pump data from 22 weeks to simulate a switching and bidding process. Firstly, by applying a reliable strategy, the aggregator aims to choose the bid size in such a way that no fines result and the aggregator is always available to deliver the bid capacity. Secondly, by using an optimization strategy, the aggregator aims to select the weekly bid size in such a way that the net revenue (revenue – total fines) is maximized. Finally, an opportunistic scenario is considered in which the aggregator deceives the TSO by sending falsified information regarding the portfolio and baseline. By doing so, the aggregator can avoid non-availability fines and maximize its net revenue solely based on fines for inadequate response. Results show that the net revenue that the aggregator can generate per household is relatively low, making such a project challenging. Non-availability fines seem to be a stronger limiting factor to the bid size and net revenue compared to fines for inadequate response. This leads to a large difference between the three strategies. Net-revenue optimization methods used in the opportunistic and optimization strategy might jeopardize the integrity towards the party that procures flexibility and should therefore, if applied, be used with caution. Other factors that are found to influence the results are market developments, TSO regulations and comfort constraints of end-users.