Integration of Automatic Generation Control and Demand Response via a Dynamic Regulation Market Mechanism

Modern power systems utilize automatic generation control (AGC) for real-time frequency regulation to ensure power balance of generation and consumption. Increasing penetration of intermittent renewables will introduce greater variability in generation, which in turn requires an even higher participation of AGC. In light of this, frequency regulation becomes a very critical service in modern power systems' operations that has to be carried out with high economic efficiency. The use of demand response (DR) is being offered as a green, affordable alternative to conventional generation-based AGC. Although advances in wide-area monitoring and control technologies have made real-time control of DR a possibility, significant challenges remain for large-scale integration. In this paper, we propose a dynamic regulation market mechanism (DRMM) that allows both DR units and generators to bid for regulation service in real time, ensuring optimal allocation and reducing regulation service costs. Unlike similar proposals in the literature, the DRMM is practical to implement on a large power system with multiple areas. In particular, the DRMM requires modest communication rates on par with the existing AGC system and can explicitly accommodate constraints on DR energy deferment. We demonstrate the added benefit of the DRMM over the conventional AGC through simulations on a 3-area 900-bus power system and derive conditions for its stability.