Day Ahead Tariff Setting for Islanded Microgrids Considering Customers Response

Abstract

This paper considers the problem of day ahead pricing in an islanded microgrid. In order to find cost reflective tariffs, an optimization problem is formulated to estimate the hourly day ahead prices. The optimization problem maximizes the profit of the owner of the microgrid in one hand and reduces the payment of the customers for their needed energy on the other hand. The proposed load forecasting method is achieved using a generative hierarchical model. The estimation of the marginal costs of the generated electrical energy has been established using the levelized cost of energy theory as a basis. The forecasted energy generation and consumption and the marginal costs of producing the energy are the inputs of the optimization problem. The optimization problem is used to simulate the behavior of the customers in a microgrid with 25 residential homes. The obtained results reflect the effectiveness of the proposed model reducing the electrical consume during peak hours.