Optimized Day-Ahead Pricing With Renewable Energy Demand-Side Management for Smart Grids

Abstract

Internet of Things (IoT) has recently emerged as an enabling technology for context-aware and interconnected “smart things.” Those smart things along with advanced power engineering and wireless communication technologies have realized the possibility of next generation electrical grid, smart grid, which allows users to deploy smart meters, monitoring their electric condition in real time. At the same time, increased environmental consciousness is driving electric companies to replace traditional generators with renewable energy sources which are already productive in user's homes. One of the most incentive ways is for electric companies to institute electricity buying-back schemes to encourage end users to generate more renewable energy. Different from the previous works, we consider renewable energy buying-back schemes with dynamic pricing to achieve the goal of energy efficiency for smart grids. We formulate the dynamic pricing problem as a convex optimization dual problem and propose a day-ahead time-dependent pricing scheme in a distributed manner which provides increased user privacy. The proposed framework seeks to achieve maximum benefits for both users and electric companies. To our best knowledge, this is one of the first attempts to tackle the time-dependent problem for smart grids with consideration of environmental benefits of renewable energy. Numerical results show that our proposed framework can significantly reduce peak time loading and efficiently balance system energy distribution.