An economic demand management strategy for passive consumers considering demand-side management schemes and microgrid operation

In a modern power system, a consumer can economically meet its demand by choosing the right strategy. The first and most convenient option, but obviously not the economic one, is to buy energy directly from the different electricity markets. The next choice, to minimize costs, is to supply electricity using the local generations. The latter can evoke the concept of microgrid if self-sufficiency exists. Meanwhile, alongside these choices, demand-side management (DSM) schemes are efficient supplementary solutions in the economic provision of demand. In fact, the efficient strategies of microgrids and DSM can be applied to the customer side to enhance loads flexibility. Despite the provision of significant advantages, the economic operation of microgrids is one of the most critical challenges in the power system. In response to this challenge, DSM, which is an efficient strategy that has provided considerable potentials in the restructured power systems, can be the resolution. In this chapter, the impact of customers’ participation level in demand response (DR) programs alongside its operation in the form of microgrid are investigated from the economic point of view. An approach is proposed to evaluate the installation and operation costs of a microgrid versus DR cost to opt an economic demanding strategy for a large-scale consumer. Two DR programs including price-based DR (PDR) and incentive-based DR (IDR) are considered in the studies. The proposed model is implemented in three real case studies that are investigated through simulations to study the different aspects of the problem. The results illustrate significant benefits that are obtained by applying the proposed economic management.