Calculating retail prices from demand response target schedules to operate domestic electric water heaters

Abstract

Abstract The paper proposes a demand response scheme controlling many domestic electric water heaters (DEWHs) with a price function to consume electric power according to a target schedule. It discusses at length the design of an algorithm to calculate the price function from a target schedule. The price function is used by the control of each DEWH to automatically and optimally minimize its local heating costs. It is demonstrated that the resulting total power consumption approximates the target schedule. The algorithm was successfully validated by simulation with a realistic set of 50 DEWHs assuming perfect knowledge of parameters and water consumption. It is shown that the algorithm is also applicable to clusters of large numbers of DEWHs with statistical knowledge only. However, this leads to a slightly higher deviation from the target schedule.

Keywords

• Smart grid
• Demand response
• Pricing scheme
• Bilevel optimization
• Heuristic
• Target schedule