Traditional demand response (DR) research is based on the price elasticity of demand in economics. However

the elasticity can hardly be obtained for lack of historical data

leading to the difficulty in exactly reflecting customers’ response behavior. Therefore

an economy-driven model and a method of DR for thermostatically-controlled loads based on cost-benefit analysis are proposed. Take the ice storage equipment as an example. Customers’ investment behavior with respect to mid-term and long-term DR response is studied. According to historical operation data

customers’ consumption stickiness is recognized and an economy-driven DR model is developed. The DR model is optimized in light of the annual load curve. Then the scenario reducing technique is employed to extract typical annual scenarios

thereby decreasing model dimensions and improving computational efficiency. After analyzing the cost and benefit of DR

the customer DR function is generated

by which the customers’ response behavior is accurately reflected. The case study based on an industrial customer in a province shows that the model and method proposed can recognize customers’ consumption stickiness

generate DR functions and exactly reflect customers’ response behavior

while achieving scientific decision making for mid-term and long-term DR investment. This work is supported by National Natural Science Foundation of China (No. 51537005) and State Grid Corporation of China (No. DZ71-14-042).