Demand Response Planning Tool using Markov Decision Process

Demand response has been used as a technique to influence the behavior of energy consumers to reduce their energy consumption based on participation in incentive-based or event-driven programs. In this paper, a Markov Decision Process is proposed as a decision making framework to study the behavior of energy consumers under different energy pricing policies utilizing rewards and/or penalties. Numerical results show that a combination of both rewards and penalties in the energy pricing policy offer the ideal reduction in power demand averaged over 30 minutes during high peak period.