Multi-tier incentive scheme for residential customer participation in demand response management programs

In this paper, we develop a framework to manage incentive payments for participants of residential DRM programs. We consider multi-tier participation plans, clearly elaborating the terms of engagement with the grid operator for individual devices and making it easier to quantify inconvenience experienced by participants and financial gains for the grid operator. Our proposed framework aims to optimize the average incentive-inconvenience ratio. Using our framework, the grid operator can achieve a desired profit margin, while the participating customers receive maximum incentive payments according to the inconvenience value of the subscribed plan.