Linear Optimization of Demand Response with Endogenous Estimation of Marginal Price

Demand Response (DR) refers to changes in electricity consumption by end-users in response to price signals or incentives. Its main goal is to improve the efficiency and reliability of the power system. DR helps align energy demand with available supply, especially during periods of high demand or limited generation availability. This can lead to benefits such as reduced system operation costs, mitigated price volatility in the electricity market, deferred investments in new generation and transmission infrastructure, and greater integration of intermittent renewable energy sources.