A Decentralized Optimization Algorithm for Residential Demand Side Management in Smart Grids

In this paper, a decentralized demand response (DR) optimization algorithm for home appliance scheduling is proposed. The algorithm aims at minimizing the user's electricity bill by shifting the appliances' time of operation to off-peak periods based on the pricing scheme used. The users are divided into three categories according to their appliances' operation time flexibility. The proposed algorithm performance is evaluated under Time of Use (TOU) and Quadratic Pricing Function (QPF). The results are then compared to those obtained by the centralized approach. The user's electricity bill is minimized in case of applying TOU and QPF pricing schemes but QPF yielded lower peak-to-average ratio (PAR). The performance of the algorithm is tested in case of existence of energy storage system (ESS) in homes. Moreover, simulation results showed that obtaining a battery as an energy storage device is beneficial for the users in terms of electricity bill reduction.