A Bi-Level Framework for Supply and Demand Side Energy Management in an Islanded Microgrid

Time-varying electricity prices in demand response (DR) programs motivate users to change their consumption behavior with the aim of electricity bill cost minimization. Coordinated DR schemes aim to flatten the aggregate load profile and mitigate rebound peaks. However, a comprehensive model which integrates supply and demand sides has to be developed to consider system constraints and renewable energy resources. In this regard, this article proposes a bi-level framework for supply and demand side energy management in an islanded microgrid. In the first level, consumers schedule their appliances’ operation to minimize their expenses. In the second level, a dynamic economic dispatch problem is solved which finds the power generation schedule for the generators resulting in the minimum electricity production cost. A game-theoretic turn-based decentralized algorithm is suggested which manages the interaction between both levels. Simulation results show that the proposed algorithm minimizes users’ electricity bill costs while satisfying power system constraints.