Design of an incentive-based demand side management strategy for stand-alone microgrids planning

Demand Side Management Strategies (DSMSs) can play a significant role in reducing installation and operational costs, Levelized Cost of Energy (LCOE), and enhance renewable energy utilization in Stand-Alone Microgrids (SAMGs). Despite this, there is a paucity in literature exploring how DSMSs affects the planning of SAMGs. This paper presents a methodology to design an incentive-based DSMS and evaluate its impact on the planning phase of a SAMG. The DSMS offers two kinds of incentives, a discount in the flat tariff to increase the electrical energy consumption of the users, and an extra payment added to the fare to penalize it. The design of the methodology integrates the optimal energy dispatch of the energy sources, the tariff design, and its sizing. In this regard, the main contribution of this paper is the design of an incentive-based DSMS using a Disciplined Convex approach, and the evaluation of its potential impacts over the planning of SAMGs. The methodology also computes how the profits of the investors are modified when the economic incentives vary. A study case shows that the designed DSMS effectively reduces the size of the energy sources, the LCOE, and the payments of the customers for the purchased energy. © 2020, Aalborg University press. All rights reserved.