2.2.2. Business Process

Flexible loads participate in grid interaction through demand response, which can generally be divided into two basic modes: price-based demand response and incentive-based demand response. Price-based demand response refers to the behavior of users voluntarily avoiding high electricity prices to low electricity prices under the stimulation of electricity price signals; incentive-based demand response refers to users signing agreements with the grid side in advance in order to obtain economic compensation by accepting the direct control or interference control of electricity consumption from the grid side. The above operation requires the user to negotiate with the grid side in advance in the interactive contract to obtain appropriate data. The process is shown in Figure 4.

**Figure 4.** Real-time dispatching process of power grid considering flexible load.

The implementation of flexible load response projects should follow the principles of "safety, reliability, fairness, equality, openness, and transparency". Safety and reliability are the primary principles to be followed in the construction and implementation of demand response capabilities. It is necessary to ensure the stable and reliable operation of the power grid and the safe operation of enterprises; the principle of fairness and equality guarantees the effective development of demand response work, in strict accordance with relevant laws during the implementation process. The policies and agreed rules are implemented fairly and fair to all participating users; the principle of openness and transparency guarantees the continuous advancement of demand response work, the rules of participation are simple and clear, open to the society, and the majority of users are encouraged to participate voluntarily. During the implementation of demand response organization, choose a reasonable response range and capacity to ensure a basic balance between the peak electricity price

increase fund and the power demand response subsidy expenditure. The process of flexible load participation in demand response is shown in Figure 5.

**Figure 5.** Flow chart of flexible load participation in demand response operation.

#### **3. Market Clearing and Safety Checking Model**

#### *3.1. Market Clearing Model that Considers the Convertible Load*

In the traditional power-dispatching model, the power producers need to fully generate power according to the dispatching instructions [25]. However, in the power market environment, the dispatching instructions must meet the needs of the power producers and the demand of the power load [26]. The electric load can be divided into the conventional load and the flexible load, and the conventional load can participate in the market bidding. The flexible load can increase the flexibility of the load by changing the demand for electric power. However, the flexible load cannot fully participate in the power adjustment, and the most basic power demands must be meet. The proportion of the flexible load participating in the market can be calculated by the following formula:

$$\mathbf{x} = \frac{P\_{\text{fl}}}{P\_{\text{fl}} + P\_{\text{s}}} \tag{5}$$

where *P*fl and *P*s represent the flexible load and the normal load, respectively. Due to the limited share of flexible load in the market, the scale factor *x* ranges from [0, θ] and the value of θ does not exceed 0.3.
