Impact of Demand Response on Optimal Sizing of Distributed Generation and Customer Tariff

Due to the surge in load demand, the scarcity of fossil fuels, and increased concerns about global climate change, researchers have found distributed energy resources (DERs) to be alternatives to large conventional power generation. However, a drastic increase in the installation of distributed generation (DGs) increases the variability, volatility, and poor power quality issues in the microgrid (MG). To avoid prolonged outages in the distribution system, the implementation of energy management strategies (EMS) is necessary within the MG environment. The loads are allowed to participate in the energy management (EM) so as to reduce or shift their demands to non-peak hours such that the maximum peak in the system gets reduced. Therefore, this article addresses the complication of solutions, merits, and demerits that may be encountered in today's power system and encompassed with demand response (DR) and its impacts in reducing the installation cost, the capital cost of DGs, and total electricity tariff. Moreover, the paper focuses on various communication technologies, load clustering techniques, and sizing methodologies presented.