Capacity Market-Based Demand Response Approach for Efficient Power Distribution in Residential Microgrid

Abstract

This paper presents a novel Demand Response algorithm based on a capacity market framework for efficient power management in residential microgrids. The primary objective is to minimize load shedding and enable effective direct load control in smart home environments. By establishing two-way communication channels between distribution agents and smart home customers, the proposed algorithm facilitates real-time load control decisions, accurate calculation of reduction percentages and the generation of home-specific Distributed Load Consumption Factors. An agent-based residential distribution network model was developed in MATLAB/Simulink, incorporating eight clients and integrated smart appliances to validate the algorithm’s efficacy. Simulation results demonstrate that the network can maintain grid power balance through three key mechanisms: adaptive load adjustment, strategic load shifting and distributed load reduction. Under supply-constrained conditions, the approach effectively diminishes or even eliminates the necessity for load shedding. The capacity market-based paradigm proves highly advantageous for stand-alone microgrid systems, where optimal resource management is critical for ensuring system stability and enhancing customer satisfaction.