This work concentrates on issues with demand response on residential end-consumers. It is motivated by the fact that demand response (DR) provides flexibility to the power system, especially with the integration of uncertain renewable energy resources such as wind and solar. As an innovative type of DR, coupon incentive-based demand response (CIDR) incentivizes load shedding and reshaping of end-consumers by issuing some coupon prices in peak-price hours. EnergyCoupon is a first-of-its-kind implementation of CIDR; a small-scale experimental result indicates behavior changes and load reshaping achieved by active participants. At the market level, demand response provider (DRP) serves as an aggregator of DR from a group of end-consumers without the obligation of serving the load. While it is accepted by multiple ISOs as a participant into the wholesale markets, it also draws great concern and heated discussions on the treatment of DRPs in the wholesale market, such as the revenue inadequacy problem. To this end, this dissertation focuses on the following issues: 1) modeling CIDR with bounded rational consumers; 2) introducing EnergyCoupon as an implementation of incentive-based DR, and analyzing customer behavior change during the experiment; 3) providing an innovative scenario-based economic dispatch considering uncertain DRPs; 4) discussing and providing solutions to the revenue inadequacy problem caused by DRPs in the wholesale market.
