Design of an Incentive-based Demand Side Management Strategy for Stand-Alone Microgrids Planning

Abstract

This paper presents the design of a Demand Side Management Strategy (DSMS) using Integer Linear Programming (ILP) for the planning of Stand-Alone Microgrids (SAMG). The DSMS uses a reduction in the tariff to increase the consumption and an extra payment added to the fare to penalize it. To evaluate the performance of the DSMS in the planning of the SAMG, the proposed methodology must be able to solve the sizing and the optimal dispatch for the DSMS simultaneously. In this regard, we introduce a nested simulation model that works inside of the sizing formulation of the SAMG. In one hand, the sizing algorithm use a heuristic formulation that mimics the behavior of the gradient descent method for discrete functions. In the other hand, the ILP approach of the DSMS is formulated as a function of the installed capacities and unitary installation costs to facilitate the cooperation between both algorithms. Afterward, the simulation model is used to obtain the installation and operational costs. This process repeats until the sizing algorithm finds the less expensive combination of capacities that can feed the electrical demand. Simulation results show reductions in the values of the sizing and the Levelized Cost of Energy when the planning of the SAMG uses the designed DSMS.