A Market-Based Optimization Approach for Domestic Thermal and Electricity Energy Management System: Formulation and Assessment

The increase of domestic electrical and thermal controllable devices and the emergence of dynamic electrical pricing leads to the opportunity to integrate and optimize electrical and thermal energy at a house level using a home energy management system (HEMS) in order to minimize the energy costs. In the literature, optimization-based algorithms yielding 24-h schedules are used in spite of their growing complexity with the number of controllable devices and their sensitivity to forecast errors which leads, in most of the cases, to suboptimal schedules. To overcome this weakness, this paper introduces a domestic thermal and electrical control based on a market approach. In contrast with the optimization-based HEMS, the proposed market-based approach targets a scalable and reactive optimal control. This paper first formulates the market-based optimization problem with generality and discusses its optimality conditions with regards to the microeconomic theory. Secondly, this paper compares its optimality to an optimization-based approach and a rule-based approach under forecast errors using Monte Carlo simulations. Finally, this paper quantifies and identifies the effectiveness boundaries of the different approaches