Effect of Price Responsive Demand on the Operation of Microgrids

Abstract—In this paper, a demand elasticity model is developed and tested for the dispatch of microgrids. The price obtained from dispatching the network in a base-case scenario is used as input to a demand elasticity model; this demand model is then used to determine the price-responsive demand for the next iteration, assuming that the load schedule is defined a day ahead. Using this scheme, trends for demand, hourly prices, and total operation costs for a microgrid can be obtained, to study the impact of demand response on unit commitment. This way, for a microgrid, the effect on the scheduling of diesel generators and energy storage systems can be analyzed with respect to price-elastic loads. The results for a benchmark microgrid show that the proposed 24-hour model eventually converges to a steady state, with prices and costs at their lowest values for different scenarios. Moreover, it is confirmed that elastic demand in a microgrid reduces electricity price variability and mitigates the need for storage in the presence of high penetration of renewable energy. Keywords—Microgrid dispatch, demand response, DSM, energy storage, demand elasticity, optimization. Nomenclature Indexes d Directly controllable loads. g Generator unit. i, j System buses. s Storage devices. t, k Time steps. Variables δi,t Voltage angle at bus i, time t [rad]. PDCd,t Energy curtailed or shifted of load d at time t [kWh]. PDS d,t Energy shifted of load d to time t [kWh]. PGg,t Energy generated by unit g at time t [kWh]. PS s,t Energy absorbed or delivered by storage device s at time t [kWh]. ρi,t Electricity price at bus i, time t [$/kWh]