Design of an Incentive-based Demand Side Management Strategy using ILP for Stand-Alone Microgrids Planning

The planning of Stand-Alone Microgrids (SAMG) can integrate Demand Side Management Strategies (DSMSs) using the Integrated Resource Planning Framework. Despite that DSMS demonstrate to reduce operational costs of power systems and microgrids, there is a paucity of literature exploring how DSMS can affect the planning of SAMG. In this regard, this paper presents the design of a DSMS using Integer Linear Programming (ILP) for the planning of SAMG. To evaluate the performance of the DSMS in the planning of the SAMG, the proposed methodology uses a ILP formulation for the optimal dispatch of the energy sources and the DSMS. The ILP formulation runs inside of a heuristic approximation of the gradient descent method that computes the size of the energy sources of the SAMG. Simulation results show reductions in the size of the energy sources and the Levelized Cost of Energy when the planning of the SAMG uses the designed DSMS. A sensitivity analysis demonstrates that the reductions in the size of the energy sources and the LCOE are consistent under variations in the Diesel price, Global Horizontal Irradiation and Battery Energy Storage System costs.