Demand-Side Bidding Strategy for Residential Energy Management in a Smart Grid Environment

Abstract

By offering appropriate incentives, electricity users can be incentivized to alter their power consumption patterns so as to achieve the electricity supplier's intended profile. In this paper we have proposed a day-ahead demand-side bidding approach to realize the desired demand response. In our mechanism, customers submit their day-ahead electricity demands to the utility company through a secure communication infrastructure. The electricity supplier then generates the customers' hourly demand profile by aggregation of the individual requests. This information then forms the basis of procuring power in the wholesale market as well as developing a dynamic electricity pricing scheme. However, as expected, the actual electricity supply and the actual electricity consumption may not match. This could be due to the inability of the utility company to secure enough power at the wholesale market or due to changes in consumer power requirements. In the event the demand outstrips the supply, the customers willingly offer to shed some of their flexible appliances' loads but bid for prices at which they would like to pay for the curtailed load. We assume that customers are rational but selfish and are only concerned with maximizing their own benefits. In this study, this demand- side bidding problem is mathematically formulated and solved. Simulation studies are also carried out to verify the effectiveness of the proposed method.