Determining a Demand Response Incentive for Microgrids

The return of investment of a microgrid (MG) project can be accelerated by minimizing the cost of energy production. Implementing demand response (DR) is one of the inexpensive solutions to accelerate this investment return rate. Under a DR program, MG loads can be re-scheduled from peak to off-peak periods, or shaved and shed during peak periods, depending on the loads' flexibility. However, additional costs are needed to provide the enabling technologies. On the other hand, DR execution may reduce customers' comfort; thus, the MG operator should provide some incentives to the participants for compensation. The given incentives should be effective and feasible for both DR participants and the MG operator. This study aims to determine the DR incentives derived from the differences of MG profit before and after implementing this program. The given incentive varies based on the discomfort level, felt by the participants, and the load's economic value. A Genetic Algorithm tool is used as the optimization method in this study.