Incorporating Demand Response with Load Shifting into Stochastic Unit Commitment

51 Pages Posted: 6 Apr 2013

See all articles by Frank Schneider

Frank Schneider

University of Cologne - Department of Supply Chain Management and Management Science

Diego Klabjan

Northwestern University

Ulrich W. Thonemann

University of Cologne - Faculty of Management, Economics and Social Sciences

Date Written: April 3, 2013

Abstract

High costs for fossil fuels and increasing installations of intermittent energy sources are imposing major challenges on power grid management. Uncertainty in generation and demand for electric energy require flexible generation capacity and stochastic optimization of generation schedules. Emerging smart grid technology is one mean to increase efficiency in power generation and to mitigate effects of increasing uncertainty. In this paper, we analyze the potential of demand side resources (DSRs) that can be dispatched to reduce load at peak times. We present a stochastic dynamic programming model for the unit commitment problem in a day ahead market and include dispatch decisions for DSRs. Unlike previous research, we model the stochastic load shifting effect to previous and subsequent periods that must be taken into account when making dispatch decisions. We also present a solution algorithm that combines an approximate dynamic programming algorithm with stochastic progressive hedging to solve the problem. We prove convergence results for our algorithms and derive a lower bound on the optimal solution. Using data from the California Independent System Operator region, we show that our approach can solve real world instances in reasonable time. We conduct an extensive numerical study using real world data to show that substantial savings can be achieved by utilizing DSRs.

Keywords: Demand Response; Stochastic Unit Commitment; Approximate Dynamic Programming; Stochastic Progressive Hedging

Suggested Citation

Schneider, Frank and Klabjan, Diego and Thonemann, Ulrich W., Incorporating Demand Response with Load Shifting into Stochastic Unit Commitment (April 3, 2013). Available at SSRN: https://ssrn.com/abstract=2245548 or http://dx.doi.org/10.2139/ssrn.2245548

Frank Schneider (Contact Author)

University of Cologne - Department of Supply Chain Management and Management Science ( email )

Albertus-Magnus-Platz
Cologne, 50923
Germany

Diego Klabjan

Northwestern University ( email )

2001 Sheridan Road
Evanston, IL 60208
United States

Ulrich W. Thonemann

University of Cologne - Faculty of Management, Economics and Social Sciences ( email )

Richard-Strauss-Str. 2
Cologne, D-50923
Germany

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