Optimal bidding strategy of responsive demands in a new decentralized market-based scheme

In this paper, a market-based control scheme is proposed to determine the minimum billing cost of responsive demands with the minimum impact on their satisfaction. For this purpose, the responsive demands are modeled as agents who bid to the energy market. In the model, the financial compensation provided by the market motivates the responsive demands to shift their load to off-peak periods. Since dissatisfaction is caused by the deviation from the reference consumption, the responsive demands' bids are dependent on the level of satisfaction that consumers are willing to have. Numerical results reveal that the billing cost of these customers is meaningfully decreased compared to the uncontrolled approaches. In addition, the results are compared to the centralized aggregation-based approach, in which a demand response aggregation entity directly buys energy on behalf of responsive demands in the market. The results indicate the effectiveness of the proposed decentralized market-based scheme.