Smart Energy: A Collaborative Demand Response Solution for Smart Neighborhood

Demand response aims to improve the reliability of the power system by mitigating the impact of the growing penetration of renewable energy sources. It aims to influence, through time-variable pricing or incentives, the ability and willingness of consumers to modify their consumption in line with utilities’ needs. In a residential context for instance, under time-variable pricing, an advanced home energy management system can take advantage of demand flexibility to optimize the cost of energy consumption while meeting household comfort constraints. However, uncoordinated demand response programs may lead to undesirable outcomes such as rebound peaks at the neighborhood level. In this chapter, we propose a novel collaborative demand response towards a smart neighborhood. Our solution enables households to collaborate achieving an overall welfare, e.g. load flattening, while still meeting their own optimization objective, e.g. cost reduction. For this purpose, we formulate and solve the problem of robust collaborative neighborhood, where robustness measures are applied to mitigate the collaboration uncertainty, i.e. whether households collaborate to achieve overall welfare or focus on their optimization objective. Numerical analysis highlights that our solution can achieve a significant tradeoff between utilities’ and households’ welfare. Compared to non-collaborative scenarios, collaboration will reduce the peak power by about 42 % to 46 % while increasing the consumption cost by about 1.06 % to 2.75 % per household.