Pricing strategy for device-level demand response in a microgrid

Microgrid usually contains various distributed generators, storage devices and loads with a distribution network. This paper presents a pricing strategy for device-level demand response in a microgrid. The heterogeneity in demand is detected at device-level and the demand response mechanism is designed based on the sensitivity function, which reflects the incentives for time shifting of demand at the device level. The price variation is represented as the reward or penalty to the original price. Three sensitivity functions are discussed and a least-fluctuation optimization model is proposed with the demand response mechanism designed. Numerical results show that the optimal pricing strategy can be obtained with this model for the device-level demand. The least fluctuation of the energy flows from and to the microgrid with guaranteed fairness between the supply and demand sides.