Economic models and constraints for informed participation

A flexibility mechanism is worth no more than the customer's decision to enter it. And that decision is not only economic: it depends on what the person understands of the offer, what they are exposed to, and the effort being asked of them. A badly parameterised incentive produces either participation too small to be useful, or a reaction so large and so synchronised that it creates the very peak it was meant to remove.

This project identifies and parameterises the economic models that allow informed participation: structuring tariffs and incentives for coordination across all markets, and establishing the dynamic constraints that bound the aggregate effect of those signals. The point is to make participation worthwhile for the customer without making it dangerous for the grid.

Main objective

Identify and parameterise economic models that allow informed participation, and establish the dynamic constraints framing the aggregate effect of tariffs and incentives.

Methodology

Reviewing tariff and incentive structures applicable to the Québec context; modelling the participation decision under partial information; identifying the dynamic constraints that bound the aggregate response; evaluating parameterisations by simulation over customer populations drawn from the laboratory's datasets.