Demand Response Pricing Strategies for Islanded Microgrids

In this paper, Time of Use and Critical Peak Pricing policies are designed and their effects on optimized operation is evaluated. For this purpose, an optimal operation algorithm is employed and the relevant production costs are derived. As far as the Time of Use policy is concerned, such costs are observed to be different in two time intervals of the day, due to the loads changing effect and the production of renewable energy. Whereas in the Critical Peak Pricing Policy, a peak time interval is identified to set up different pricing rates. The optimization algorithm used to carry out the work described above minimizes the microgrid's energy losses, the production costs and the Green House Gas emissions and controls the power exchange with the main distribution grid. Loads control is indeed also another control variable that may help to get these objectives through active demand.