Estimating the benefits of cooperation in a residential microgrid: A data-driven approach

• Demand response puts pressure on energy providers to consider new pricing schemes.
• We introduce cooperative demand response. It can cut energy bills by 10%.
• A capacity-pricing component can encourage reductions in peak demand.
• Cooperative demand response can benefit consumers and energy providers alike.

Private households are increasingly taking cooperative action to change their energy consumption patterns in pursuit of green, social, and economic objectives. Cooperative demand response (DR) programs can contribute to these common goals in several ways. To quantify their potential, we use detailed energy consumption and production data collected from 201 households in Austin (Texas) over the year 2014 as well as historic real-time prices from the Austin wholesale market. To simulate cooperative DR, we adapt a load-scheduling algorithm to support both real-time retail prices and a capacity-pricing component (two-part pricing schemes). Our results suggest that cooperative DR results in higher cost savings for households than individual DR. Whereas cooperative DR that is based on real-time pricing alone leads to an increase in peak demand, we show that adding a capacity-pricing component is able to counteract this effect. The capacity-pricing component successfully reduces the cooperative’s peak demand and also increases the cost savings potential. Effective peak shaving is furthermore only possible in a cooperative setting. We conclude that cooperative DR programs are not only beneficial to customers but also to energy providers. The use of appropriate tariffs allows consumers and suppliers to share these benefits fairly.