Auction Markets and Other Procurement Mechanisms for Demand Response Services

This Technical Brochure identifies the operational aspects and complexities in procurement of demand response (DR) services. The Working Group C5.26 collected information on DR services and their procurement mechanisms from Australia, Ontario (Canada), India, Brazil, South Africa, Japan, Sweden, and Texas (USA). DR participation in each system were classified by mode of procurement, participation time-frame, operational domain (energy, ancillary services, or capacity), and type of DR program. Since DR allows peak demand reduction, there is a direct relation between the need and/or development of DR programs or services and peak demand growth. The three most important drivers for DR programs were identified to be: peak demand reduction requirement, security of supply, and reduction of market price volatility. The last identified driver applies to those countries and jurisdictions which have an existing DR market.