Flattening the electricity consumption peak and reducing the electricity payment for residential consumers in the context of smart grid by means of shifting optimization algorithm

Abstract Nowadays, by means of smart meters and sensors, more and more electricity consumers can shift the operation of some of their appliances thus, reducing the electricity expenses calculated on advanced tariff schemes such as time-of-use (ToU) tariff. In this paper, we propose an optimization algorithm that can be automatically implemented by the electricity suppliers without knowing the specific characteristics of residential consumers’ appliances (preserving privacy) to flatten the daily consumption curve and identify the ToU tariff that would reduce the consumers’ electricity payment. This way the consumers will receive incentives to provide the daily operation schedule of the appliances indicating their type, considering that the electricity appliances are divided into programmable and non-programmable appliances. The dependency between operations of some appliances brings certain constraints to the optimization model that shift programmable appliances from peak to off-peak hours. Therefore, the flattening of the consumption peak relies on programmable appliances, while the operation of the non-programmable appliances forms the base of the daily consumption curve. By transparently implementing the optimization algorithm in relation to several ToU tariffs, the suppliers show the benefits in terms of consumption peak and electricity payment reduction. Also, this would stimulate the consumer to shift the operation of appliances and choose the tariff that minimizes the electricity payment that is a function of the consumption flexibility. Although the proposed algorithm is mainly designed to flatten the consumption peak, it can further restrict the operation of the programmable appliances at high-rate time intervals that rewards the flexible consumers with more savings.