Integration of demand response and renewable resources for power generation management

A single-period optimal dispatching problem is considered for a network of energy utilities connected via multiple transmission lines, where we seek to find the lowest operationalcost dispatching of various energy sources to satisfy demand. Our model includes traditional thermal resources and renewable energy resources available generation capabilities within the grid. A key novel addition is the consideration of demand reduction as a virtual generation source that can be dispatched quickly to hedge against the risk of unforeseen shortfall in supply. Demand reduction is dispatched in response to incentive signals sent to consumers. The control options of our optimization model consist of the dispatching order and dispatching amount of the thermal generators together with the rebate signals sent to end-users at each node of the network under a simple demand response policy. Numerical experiments based on our analysis of representative data are presented to illustrate the effectiveness of demand response as a hedging option.