Concurrent optimization of consumer's electrical energy bill and producer's power generation cost under a dynamic pricing model

Abstract

Demand response is a key element of the smart grid technologies. This is a particularly interesting problem with the use of dynamic energy pricing schemes which incentivize electricity consumers to consume electricity more prudently in order to minimize their electric bill. On the other hand optimizing the number and production time of power generation facilities is a key challenge. In this paper, three models are presented for consumers, utility companies, and a third-part arbiter to optimize the cost to the parties individually and in combination. Our models have high quality and exhibit superior performance, by realistic consideration of non-cooperative energy buyers and sellers and getting real-time feedback from their interactions. Simulation results show that the energy consumption distribution becomes very stable during the day utilizing our models, while consumers and utility companies pay lower cost.