Optimal demand response based on time-correlated utility in forward power markets

This paper is concerned with integration of demand response from small loads such as residential small appliance into forward electricity market. We use a simple model and formulate the problem as a dynamic program that maximizes social welfare. We focus particularly in those electric appliances with intertemporal consumption constraint. The satisfaction of end-users from operating them are captured through a utility function, which is also time-correlated. We pursued Lagrange decomposition in order to solve the high complexity problem optimization of the complete system. The main purpose is to optimally schedule a day in advance Local Service Entity´s (LSE) procurement and final-users consumption in the forward electricity market.