Hierarchical Demand Response for Peak Minimization Using Dantzig–Wolfe Decomposition

Demand response (DR) algorithms manipulate the energy consumption schedules of controllable loads so as to satisfy grid objectives. Implementation of DR algorithms using a centralized agent can be problematic for scalability reasons, and there are issues related to the privacy of data and robustness to communication failures. Thus, it is desirable to use a scalable decentralized algorithm for the implementation of DR. In this paper, a hierarchical DR scheme is proposed for peak minimization based on Dantzig-Wolfe decomposition (DWD). In addition, a time weighted maximization option is included in the cost function, which improves the quality of service for devices seeking to receive their desired energy sooner rather than later. This paper also demonstrates how the DWD algorithm can be implemented more efficiently through the calculation of the upper and lower cost bounds after each DWD iteration.