A Stochastic Dynamic Programming Model for Optimal Use of Local Energy Resources in a Market Environment

The unbundling of power systems and the emergence of electricity markets favor the deployment of distributed generation in electricity networks. Microgrids are low-voltage distribution networks comprising micro-generation, storage devices and controllable loads that can operate interconnected or isolated from the main distribution grid as a controlled entity. This paper proposes a new method, based on stochastic optimization, to optimize the operation of a microgrid. This involves optimization of the production of the local micro- sources and storage and the exchange with the main distribution grid subject to market conditions. The results of the stochastic approach, and a comparison with a simpler deterministic one are presented using as case study a typical microgrid.