Smart home energy optimization with incentives compensation from inconvenience for shifting electric appliances

Abstract Demand management programs help utilities to reduce the load demand during high wholesale electricity price or system peak periods to maintain the system reliability and operational security. The challenge here is to properly address the customers’ inconvenience to encourage them to participate and meanwhile satisfy the required demand reduction efficiently. To this end, we propose a new incentive-based demand management scheme for schedulable appliances in a residential community. The proposed scheme is designed to provide scalability to the system. Different from existing literature, a new compensation scheme is adopted for the shifting of task-based appliances based on the level of inconvenience. The potentials of the schedulable appliances to contribute during the demand reduction event are assessed with a modified demand response potential. In this approach, the utility sends command and consumption limit to several controllers to perform the energy optimization. Participating customers are benefited with financial compensation along with minimized privacy concerns in the proposed centralized approach. Considering different demand reduction events within a month, the electricity bill with the proposed scheme is compared with the electricity bill from time-of-use (TOU) tariff-based optimization scheme and also with the base case (i.e., without any energy optimization scheme). Comparison of monthly electricity costs shows that the proposed scheme can save 11.3% on average more than the base case, and also the proposed scheme can save 6.2% on average more than the TOU tariff-based optimization.