Logarithmic Utilities for Aggregator Based Demand Response

This paper proposes a distributed scheme for demand response and user adaptation in smart grid networks. Our system model considers scarce distributed power sources and loads. User preference is modelled as ‘willingness to pay’ parameter and logarithmic utility functions are used to model the behaviour of users. The energy management problem is cast as an optimization problem, where the objective is to maximize the utility services to the clients based on price-based demand response scheme. We have addressed the issue concerning the allocation of power among users from multiple sources/utilities within a distributed power network based on users’ demands and willingness to pay. We envision a central entity providing a coordinated response to the huge number of scattered consumers, collecting power from all generators and assigning the power flow to the interested users. We propose a two layer price-based demand response architecture. The lower level energy management scheme deals with the power allocation from aggregator to the consumers, and the upper level deals with the distribution of power from utilities to aggregators to ensure the demand-supply balance.