Reward/Penalty Design in Demand Response for Mitigating Overgeneration Considering the Benefits from both Manufacturers and Utility Company

The high penetration of renewable sources in electricity grid has led to significant economic, environmental, and societal benefits. However, one major side effect, overgeneration, due to the uncontrollable property of renewable sources has also emerged, which becomes one of the major challenges that impedes the further large-scale adoption of renewable technology. Electricity demand response is an effective tool that can balance the supply and demand of the electricity throughout the grid. In this paper, we focus on the design of reward/penalty mechanism for the demand response programs aiming to mitigate the overgeneration. The benefits for both manufacturers and utility companies are formulated as the function of reward and penalty. The formulation is solved using particle swarm optimization so that the benefit from both supply side can be maximized under the constraint the benefit of customer side is not sacrificed. A numerical case study is used to verify the effectiveness of the proposed method.