Demand response minimizing the impact on the consumers' utility towards renewable energy

The perfectly competitive market by increasing distributed energy sources determines the electricity price uniquely. Some prior works proposed pricing methods that aim to maximize social welfare and allocate the optimal power consumption to consumers. Those works determined the optimal market price and energy procurement that balance supply and demand Due to the high penetration of renewable energy where the generated power fluctuates, we should consider demand response in addition to the energy procurement. Power consumption of a consumer changes from the optimal consumption by accepting request of demand response instead of receiving incentive. In this paper, we define the degradation rate of consumer's utility by demand response as the impact on consumer's utility and propose a demand response method that aims to minimize the total impact on consumers' utility, calculating the optimal balance between consumption and reduction of each consumer. We formulate the impact function and solve impact minimization problem in a distributed fashion using the Lagrange multiplier. By mathematical approach, we show that each consumer's effort to maximize its own overall welfare results in the minimization of the total impact on the consumers' utility. Simulation results demonstrate the feasibility of our proposed method in calculation of optimal incentive and allocation of consumer's power reduction by demand response.