Journal of Cleaner Production 222 (2019) 231e241

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Journal of Cleaner Production

journal homepage: www.elsevier.com/locate/jclepro

Optimization modeling for dynamic price based demand response in

microgrids
Muhammad Arshad Shehzad Hassan a, *, Minyou Chen a, Houfei Lin b,
Mohammed Hassan Ahmed a, Muhammad Zeeshan Khan a, Gohar Rehman Chughtai c
a
State Key Laboratory of Power Transmission Equipment, and System Security and New Technology, School of Electrical Engineering, Chongqing University,
Chongqing, 400044, China
b
State Grid Pingyang Power Supply Company, Wenzhou, 325401, China
c
College of Computer Science, Chongqing University, Chongqing, 400044, China

a r t i c l e i n f o a b s t r a c t

Article history: Eco-friendly technologies regarding electricity production are urgent need of sustainable energy
Received 27 November 2018 development. The renewable energy resources (RERs) have brought green revolution in mitigation of
Received in revised form greenhouse gaseous emission resulted from traditional energy resources (TERs). Moreover, the effective
21 January 2019
utilization of these resources is influenced by pricing schemes which have limitations. Therefore, this
Accepted 7 March 2019
paper aims at optimization modeling for dynamic price-based demand response (DR) which includes
Available online 11 March 2019
flexible and inflexible loads along with the effective utilization of RERs i.e. photovoltaics (PVs) and wind
turbines (WTs) in a microgrid (MG). The optimization problem regarding profit maximization for loads
Keywords:
Dynamic pricing scheme
(flexible and inflexible) is solved via particle swarm optimization (PSO). Two cases are used to evaluate
Demand response the performance of proposed dynamic pricing scheme. The simulation results have shown that proposed
Microgrid scheme is suitable in term of profit and comfort for flexible and inflexible loads as compared to fixed
Renewable energy resources pricing scheme in both cases. In addition, the dynamic pricing scheme is exemplified as plug and play
Particle swarm optimization devices because of its easy implementation in present market structure without any modification.
© 2019 Elsevier Ltd. All rights reserved.

1. Introduction
The increasing demand of energy and its high production results
in scarcity of input resources and increment of environmental
pollution in term of gaseous emission. Therefore, energy conser-
vation/production at cost of pollution free environment is urgent
need of time. Consequently, upcoming energy system should be
economical, reliable and efficient. On the stance of these facts,
smart grid is developed to overcome these problems (Gungor et al.,
2013; Hashmi et al., 2011). Later on, microgrid (MG) is introduced in
a smart grid as a key element to improve its efficiency (Lasseter,
2011).
To sort out energy production (along with conservation of re-
sources) problem, the researchers tried to manage the customers
demand instead of supply stand alone. Hence, the demand side
management (DSM) strategy is introduced. This strategy is not only
* Corresponding author.
E-mail addresses: arxhad@yahoo.com, arshadshehzad@cqu.edu.cn
(M.A. Shehzad Hassan).
fruitful in term of energy conservation, it has also increased the life
time and efficiency of power grid by satisfying load demand and
ultimately gaseous emission is reduced (Palensky and Dietrich,
2011). The DSM is sub-categorized into following programs; con-
servation and energy efficiency, fuel replacement, residential or
commercial load management and demand response (DR).
DR, which is an important feature of smart grids, interacts as
bridge between utilities and system operators to allow them to
update the electricity infrastructure such as cost reduction by
replacing the traditional resources with intermittent one (such as
solar and wind energy), and also facilitates the users to reduce their
electricity bills (Duong Tung and Le, 2014; Rahimi and Ipakchi,
2010). The DR programs have been classified according to various
aspects including (a) control mechanisms/techniques, (b) offered
motivations/incentives and (c) decision variables/parameters
(Vardakas et al., 2015). The control techniques regarding (a) are
sub-classified into centralized and decentralized modes (Alagoz
et al., 2012). In both modes, users’ interface with utility for load
consumption but differs due to direct (former) and indirect (later)
interaction. The incentive-based and price/time-based are sub-

https://doi.org/10.1016/j.jclepro.2019.03.082
0959-6526/© 2019 Elsevier Ltd. All rights reserved.
232 M.A. Shehzad Hassan et al. / Journal of Cleaner Production 222 (2019) 231e241
classes of offered incentives DR. In both sub-classes, consumers are
offered with some incentives which based on their load reduction
(Wissner, 2011). In price-based DR (Duy Thanh et al., 2011; Qdr,
2006), price of electricity depends upon time of use pricing, real
time pricing and critical peak pricing. During incentive-based DR
(Iwayemi et al., 2011), electricity prices may or may not be fixed
which are influenced by direct load control programs, demand
bidding programs, emergency DR programs, interruptible/curtail-
able rates (I/C) and capacity market programs. The (c) category is
divided into energy management and task-scheduling DR schemes
(Dong et al., 2012). Activation of specific load in accordance with
pre-defined time is known as task-scheduling DR schemes
(Koutsopoulos and Tassiulas, 2012). The energy management DR
schemes are achieved by adjusting the energy consumption during
peak demand hours.
According to literature wisdom (Cui and Zhou, 2018; Ding et al.,
2014; Huang et al., 2017; Xu and Lai, 2015), number of studies on DR
have been subjected for industrial and residential (Chavali et al.,
2014; Chen et al., 2012; Conejo et al., 2010; Jovanovic et al., 2016;
Khalid et al., 2018; Mohsenian-Rad and Leon-Garcia, 2010; Yi
et al., 2013) consumers. The authors in (Xu and Lai, 2015) have
practically implemented the time-based DR on industrial scale.
According to this implication, pool of industries is categorized via
utility into number of groups depending upon DR potential. Specific
pricing scheme is designed for each individual group based on
optimum load features. On the other hand, DR at residential scale is
studied through energy management. The DR price in real time
based on stochastic and robust optimization for residential appli-
ances is managed by (Chen et al., 2012). This scheme has considered
the uncertainties and applied into smart meters which automati-
cally informs the customers to optimize their electricity usage
accordingly within 5-min. This study has limitation regarding
pricing signal design. In another study (Yi et al., 2013) have intro-
duced an optimal stopping scheme for small residential DR to
schedule appliances in real time. According to this scheme, set of
various home equipment’s are used according to pre-defined
schedule (based on two-stage scheduling algorithm) and ulti-
mately results in bill saving. The multi-disciplinary optimization
approaches have been proposed by (Altayeva et al., 2017; Anvari-
Moghaddam et al., 2015; Brahman et al., 2015) to reduce the elec-
tricity bills without effect of consumer’s thermal comfort. In
(Mahboubi-Moghaddam et al., 2018), DR has utilized through
bilevel programing to achieve marginal prices by unit commitment
(upper-level), and by reducing the overall operation cost (lower-
level).
A bilevel problem is introduced by (Asimakopoulou et al., 2013),
in which large number of microgrids (MGs) are managed to study
the interaction between energy service provider (ESP) and large
central production unit. This is a step wise process which proceeds
in following order: (a) formation and optimization of energy price
by central production unit, (b) ESP receives price signal from central
production unit after optimization and (c) energy generation and
consumption are scheduled by ESP which further optimizes the
amount of energy from central production unit. However, this pa-
per lacks the interaction between renewable energy sources and
utility grid. In day-ahead energy markets; to maximize the profit of
DR aggregator, a time or price based self-scheduling model is
introduced by (Parvania et al., 2013) which based on mixed-integer
linear programming (MILP). Different procurement methods of DR
including consumption of in situ (onsite) generation and energy
storage systems (ESSs), load shifting and load curtailment are
considered for small to medium size consumers. In spite of this, DR
aggregator has some limitations regarding wholesale market
operation because of its direct interaction with wholesale market.
Hence, DR aggregator requires significant modification in
wholesale market with respect to integration of DR bids. The
(Duong Tung and Le, 2015) has proposed a risk-aware stochastic
optimization model to ensure the profit maximization of MG
aggregator and their interaction with electricity consumers. This
model has limitation in DR contracts i.e. DR price is fixed rather
than dynamic which depends upon the real operational conditions.
The optimal and practical pricing model has been proposed by
(Duong Tung et al., 2016) to integrate the DR in distribution
network. The load serving entity (LSE) as a leader and DR aggre-
gator as a follower is presented in bilevel programming to create
interaction between customers and their LSE. The nonlinear bilevel
mixed-integer program is transformed into single MILP through
strong duality theorem and karush-kuhn-tucker (KKT). In this
problem, the wholesale price for flexible load changes on hourly
basis. A win-win solution is proposed by this scheme for leader
(LSE) and follower (DR aggregator). This proposed scheme is
beneficial both leader (profit) and follower (payoff). The renewable
uncertainties were not focused. In another study (Samadi et al.,
2012), the prices have been calculated by using mean power con-
sumption of customers at each time interval to enhance the profit
of utility. Likewise, previous studies; the uncertainties are also not
included in (Samadi et al., 2012).
Conclusively, it is found that demand response schemes have
addressed without proper description (Duong Tung and Le, 2014),
(Chen et al., 2012), (Conejo et al., 2010), (Anvari-Moghaddam et al.,
2015), (Brahman et al., 2015) or just have fixed pricing scheme
(Duong Tung and Le, 2015). For example, inflexible load customers
have higher but constant profit throughout the energy usage than
flexible load customers in fixed pricing scheme. While, real-time
pricing has limitations regarding pricing signal design (either
ambiguous design or not mentioned) and also has negative impact
on small-scale flexible load customers (Chen et al., 2012). Therefore,
current study is carried out to cope with these problems and silent
features are given below:

The dynamic pricing model is designed to increase the profit of
customers (either small or large scale flexible and inflexible
power loads) which is based on renewable energy resources
(PVs and WTs) and main grid elements of the system.

For best validation, the particle swarm optimization (PSO) al-
gorithm is used to solve the DR optimization problem. Extensive
numerical results demonstrate that proposed dynamic pricing
scheme has increased the profit of both flexible and inflexible
load customers as compared to fixed pricing scheme. In addi-
tion, the profit is flexible rather than constant. This proposed
scheme has not only eliminated the negative impact of small-
scale flexible load customers but also has increased their
profit. Another plus benefit of current scheme is its easy
implementation in present market structure.
The structure of this paper is organized as follows: dynamic
pricing model for DR is presented in section 2. Section 3 consists of
the objective function and technical constraints. The system ar-
chitecture and setups for grid-connected microgrid are introduced
in section 4. The numerical results and conclusions are explained in
section 5 and section 6 respectively.
2. Dynamic pricing model
Recently, renewable energy resources possess high investiga-
tional values as a substituent of utility grid due to its high
economical cost and environmentally friendly. Generally, sunlight,
wind, geo-thermal, tides, and waves are natural sources of energy
generation. Among them, photovoltaics (PVs) and wind turbines
(WTs) are widely used renewable energy resources because of its
 M.A. Shehzad Hassan et al. / Journal of Cleaner Production 222 (2019) 231e241
simple installation. The general layout of grid-connected microgrid
having PVs and WTs along with their loads (flexible and inflexible
loads) are presented in Fig. 1. The grid-connected microgrid is an
automated system in which excessive and shortage of power is
automatically controlled by the host grid (Hassan et al., 2018).
In literature, numerous studies are used to increase the profits of
utility and customers. For this purpose, various models are
designed such as time-of-use pricing model, critical peak pricing
model and real-time pricing model etc. Among them, real-time
pricing model is the most influential because price varies with
respect to real time which shows dynamic relationship between
demand and supply (Yang et al., 2018). In practice, the flexible load
customers must need to lose their comfort during critical time
period if they fail to do so then they will be penalty which is higher
than the retail price of inflexible load customers. Therefore, we
have designed the dynamic pricing model based on renewable
energy resources (PVs and WTs) which is not only beneficial for
inflexible load customers but also for flexible load customers in
term of profit and comfort. The dynamic pricing model is given
below:
 
PRESs ðtÞ  k
f ðtÞ ¼ a 1 
Pg ðtÞ þ PRESs ðtÞ
Where f ðtÞ and Pg ðtÞ are the final dynamic price and total active
power output from main grid at time t respectively. The total active
power outputs from RESs (PVs and WTs) at time t is represented by
PRESs ðtÞ. The basic price and constant parameter are represented by
a and k.
3. Price based model for demand response
3.1. Objective function
The purpose of the objective function is to maximize the profit
for load customers via dynamic pricing model as given below:
Grid
~
WT PCC
~ 4. System architecture and setups
PV
~ load
~~
load
~
WT
PV
~ ~
load
AC Bus
Fig. 1. Grid-connected microgrid.
233
 
fix flex
max profit of loads ¼ Gx ðtÞ  f ðtÞ  Lp þ Lp ðtÞ (2)
fix
Where Gx ðtÞ is the utility function at time t. While, Lp is the fixed
load and Lflex
p ðtÞ is the flexible load during time t respectively. The
utility function is defined as total satisfaction of consumer’s com-
fort in term of power consumption at reasonable price. Therefore,
assume consumer’s utility function will have the following features
(Samadi et al., 2012):
1. The utility function should be non-decreasing because cus-
tomers need to fulfil their maximum desires.
2. The satisfaction level/utility of consumers regarding consump-
tion of first unit of electricity should exceeds the utility until the
nth unit. At this stage, utility of the users increased smoothly.
3. Zero utility should result from zero power utilization.
It is concluded from these assumptions that concerned function
(utility) should have quadratic relation with linear decreasing
marginal profit (Asr et al., 2013; Samadi et al., 2012). The utility
function is given:
(1)
Gx ðtÞ ¼ bx  cx2 0  x  xmax (3)
The energy level utilized by users in any time interval is denoted
by x. While, b and c are the parameters related to behavioral the-
ories of individuals and vary among different individuals.
3.2. Technical constraints
The following equality (power balance) and inequality (gener-
ation limit) constraints are considered to solve the objective
function:
The power balance constraint is the basic technical constraint
which is considered in this proposed paper. According to this
constraint, the production of electricity from Pg ðtÞ and PRESs ðtÞ is
equal to the system demand. The equation of the power balance
constraint is given below:
fix flex
Pg ðtÞ þ PRESs ðtÞ ¼ Lp þ Lp ðtÞ (4)
The below technical constraint (generation limit) is also
considered in this paper.
P min max
g ðtÞ  Pg ðtÞ  P g ðtÞ
(5)
According to Fig. 2, a radial and grid-connected microgrid is
designed in MATLAB/Simulink. Where there are m ¼ 12 distributed
generators (DGs) and loads. Here, load1 to load5 are flexible loads
and load6 to load12 are inflexible loads. Moreover, in the twelve
DGs, DG2, DG3, DG5, DG7, DG10 and DG11 are PVs and DG1, DG4,
DG6, DG8, DG9 and DG12 are WTs. The PVs and WTs work in
maximum power point tracking (MPPT) control mode. The value of
the constant parameter k is equal to 0.8. The parameters of the DGs
and loads are shown in Table 1 and Table 2 for case I and II.
5. Results and discussions
The efficiency of the proposed model is compared with fixed
pricing scheme which have covered two aspects. According to the
first aspect (case I), dynamic pricing scheme is implemented in
 0.4/10.5kV PCC
Grid
DG1
50kW, 0kVar ~ ~ CB1 0.03km

0-48kw
5kVar load1 cb1 0.03km
DG2
40kW, 0kVar
~ CB2

0-52kw cb2
5kVar load2

0.04km

CB3
~ DG3
60kW, 0kVar

0-46kw
0.03km cb3 load3 5kVar

0.05km

~ ~
DG4
40kW, 0kVar
0.03km CB4

0-48kw
cb4 load4
0.05km 5kVar

DG5
50kW, 0kVar
~ CB5

0-52kw cb5
5kVar load5
0.05km
~
DG6 0.03km
60kW, 0kVar
~ CB6
0.03km
15kw
load6 cb6
~
0kVar 0.04km DG7
50kW, 0kVar
CB7

cb7 20kw
load7 0kVar
0.04km
~
DG8

0.03km CB8 ~ 40kW, 0kVar

15kw
DG9
50kW, 0kVar ~ ~ CB9 0.03km
cb8 load8 0kVar

10kw
0kVar load9 cb9 0.05km
DG10
50kW, 0kVar
~ CB10

15kw cb10
0kVar load10
0.03km DG11

CB11
~ 60kW, 0kVar

10kw
0.03kmcb11 load11 0kVar

~
0.04km DG12

0.03km CB12 ~ 50kW, 0kVar

20kw
0.03km cb12 load12 0kVar

Fig. 2. Radial structure of grid-connected microgrid.

 M.A. Shehzad Hassan et al. / Journal of Cleaner Production 222 (2019) 231e241 235

Table 1 50
DGs and loads setup for case I.
P1 Q1
Sources Control Capacities Load Type of Load Max. Demand 25
DG1 MPPT 50 kW, 0 kVar Load1 Inflexible 30 kW, 0 kVar
DG2 MPPT 40 kW, 0 kVar Load2 Inflexible 40 kW, 0 kVar 0
DG3 MPPT 60 kW, 0 kVar Load3 Inflexible 35 kW, 0 kVar 40
DG4 MPPT 40 kW, 0 kVar Load4 Inflexible 20 kW, 0 kVar P2 Q2

Active power and reactive power (kW, kVar)

DG5 MPPT 50 kW, 0 kVar Load5 Inflexible 20 kW, 0 kVar 20
DG6 MPPT 60 kW, 0 kVar Load6 Inflexible 15 kW, 0 kVar
DG7 MPPT 50 kW, 0 kVar Load7 Inflexible 20 kW, 0 kVar
DG8 MPPT 40 kW, 0 kVar Load8 Inflexible 15 kW, 0 kVar
0
60
DG9 MPPT 50 kW, 0 kVar Load9 Inflexible 10 kW, 0 kVar
DG10 MPPT 50 kW, 0 kVar Load10 Inflexible 15 kW, 0 kVar P3 Q3
DG11 MPPT 60 kW, 0 kVar Load11 Inflexible 10 kW, 0 kVar 30
DG12 MPPT 50 kW, 0 kVar Load12 Inflexible 20 kW, 0 kVar
0
40
P4 Q4
20
Table 2
DGs and loads setup for case II. 0
50
Sources Control Capacities Load Type of Load Max. Demand P5 Q5
DG1 MPPT 50 kW, 0 kVar Load1 Flexible 0e48 kW, 5 kVar 25
DG2 MPPT 40 kW, 0 kVar Load2 Flexible 0e52 kW, 5 kVar
DG3 MPPT 60 kW, 0 kVar Load3 Flexible 0e46 kW, 5 kVar 0
DG4 MPPT 40 kW, 0 kVar Load4 Flexible 0e48 kW, 5 kVar 60
DG5 MPPT 50 kW, 0 kVar Load5 Flexible 0e52 kW, 5 kVar
P6 Q6
DG6 MPPT 60 kW, 0 kVar Load6 Inflexible 15 kW, 0 kVar
DG7 MPPT 50 kW, 0 kVar Load7 Inflexible 20 kW, 0 kVar
30
DG8 MPPT 40 kW, 0 kVar Load8 Inflexible 15 kW, 0 kVar
DG9 MPPT 50 kW, 0 kVar Load9 Inflexible 10 kW, 0 kVar 0
DG10 MPPT 50 kW, 0 kVar Load10 Inflexible 15 kW, 0 kVar 0 0.5 1 1.5 2 2.5 3 3.5 4
DG11 MPPT 60 kW, 0 kVar Load11 Inflexible 10 kW, 0 kVar Time (sec)
DG12 MPPT 50 kW, 0 kVar Load12 Inflexible 20 kW, 0 kVar
Fig. 3. Active and reactive power outputs of DG1, DG2, DG3, DG4, DG5 and DG6.

microgrids for inflexible loads. While, in second aspect (case II) 50

flexible and inflexible loads are used in both schemes. P7 Q7
25

5.1. Case I: Comparison of dynamic and fixed pricing schemes for 0

inflexible loads 40
P8 Q8
Active power and reactive power (kW, kVar)

5.1.1. Dynamic pricing scheme 20

The active and reactive power outputs of WTs and PVs are
represented in Fig. 3 and Fig. 4, and their reactive power outputs are 0
zero. The active power outputs of WTs (DG1, DG4, DG6, DG8, DG9
50
and DG12) and PVs (DG2, DG3, DG5, DG7, DG10 and DG11) are P9 Q9
dependent on their respective natural resources i.e. wind speed and 25
intensity of the sun light. The gradual increase in active power
outputs of DG4 and DG9 is observed with the passage of time and 0
50
its peak value is analyzed at t ¼ 4s: In DG6 and DG8, the active
power outputs have gradually decreased with time (minimum at P 10 Q10
25
t ¼ 4s). Furthermore, the maximum active power outputs of DG1
and DG12 are also experienced at t ¼ 4s and their trend (active
0
power outputs) are similar to DG4 and DG9. In case of PVs, DG5 and 60
DG7 have maximum and DG2, DG3, DG10 and DG11 have minimum
active power outputs at t ¼ 1:5s: Fig. 5 demonstrates the active and
P 11 Q11
30
reactive power output of the main grid. The main grid supplies its
active power output to loads during shortfall of renewable energy 0
resources. The main grid absorbed excessive active power output 50
generated by renewable energy resources. Fig. 6 demonstrates the P 12 Q12
line voltages and frequency in the MG. The load1 has approximately 25
380 V voltages and 50 Hz frequency throughout the line. In spite of
higher disturbances in environmental conditions, the voltages and 0
0 0.5 1 1.5 2 2.5 3 3.5 4
frequency of all the loads in the MG remain unchanged throughout Time (sec)
the line. The inflexible (fixed) loads (load1 to load12) are shown in
Fig. 7 and Fig. 8. According to these figures, the load demand of Fig. 4. Active and reactive power outputs of DG7, DG8, DG9, DG10, DG11 and DG12.
236 M.A. Shehzad Hassan et al. / Journal of Cleaner Production 222 (2019) 231e241
Active power and reactive power (kW, kVar)

50
150
LP 1 LQ1
Pg Qg 25
100
0
50
50 LP 2 LQ2
25

Active and reactive loads (kW, kVar)

0 0
50
LP 3 LQ3
-50 25

0
-100 50
LP 4 LQ4
25
-150
0 0.5 1 1.5 2 2.5 3 3.5 4
Time (sec) 0
50
Fig. 5. Active and reactive power output of the main grid. LP 5 LQ5
25
Frequency (Hz) Line Voltage (V)

400 0
30
Voltage of Load1
LP 6 LQ6
380 15

0
360 0 0.5 1 1.5 2 2.5 3 3.5 4
Time (sec)
50.5
Frequency of MG Fig. 7. Active and reactive power loads of inflexible load (load1 to load6).

50
30
LP 7 LQ7
49.5 15
0 0.5 1 1.5 2 2.5 3 3.5 4
Time (sec)
0
Fig. 6. Line voltages and frequency in the MG. 30
LP 8 LQ8
15
customers is fulfilled without losing their comfort. Regarding profit,
Active and reactive loads (kW, kVar)

dynamic pricing explains that profit of inflexible load customers 0

varies with time to time due to price variations. In contrast (Duong 30
Tung et al., 2016), has used fixed price for inflexible load customers LP 9 LQ9
which might not be as profitable as dynamic pricing scheme. In 15
addition, their work is limited to small and medium scale cus-
tomers. In another study (Jiang et al., 2014), the dynamic pricing 0
30
scheme is utilized for small scale inflexible load customers. While,
present study is compatible and profitable for small and large-scale LP 10 LQ10
customers in the distribution network. Fig. 9 and Fig. 10 demon-
15
strates the dynamic price and profit of the inflexible loads. In
addition, these figures explain that profit increased with the pas- 0
30
sage of time due to low cost and maximum profit (5600cents) is
LP 11 LQ11
observed at time interval. t ¼ 2:3s: 15

5.1.2. Fixed pricing scheme 0

The fixed pricing scheme is set at 12cents and their profits can 30
be seen in Fig. 11. The profit of the customers in dynamic pricing LP 12 LQ12
scheme is higher than fixed pricing scheme in case I. Conclusively, it 15
is found that dynamic pricing scheme is beneficial for customer
loads in cases I as compared to fixed pricing scheme. The active and 0
0 0.5 1 1.5 2 2.5 3 3.5 4
reactive power output of the main grid is shown in Fig. 12 during
Time (sec)
fixed pricing scheme. In case of less outputs of the renewable en-
ergy resources, the main grid supplies the active power to the loads. Fig. 8. Active and reactive power loads of inflexible load (load7 to load12).
 M.A. Shehzad Hassan et al. / Journal of Cleaner Production 222 (2019) 231e241 237

Active power and reactive power (kW, kVar)

5
Dynamic price 150
4.5 Pg Qg
Dynamic price (cents)

4 100

3.5
50
3
2.5 0
2
-50
1.5
1 -100
0.5
0 0.5 1 1.5 2 2.5 3 3.5 4 -150
Time (sec) 0 0.5 1 1.5 2 2.5 3 3.5 4
Time (sec)
Fig. 9. Dynamic pricing scheme.
Fig. 12. Active and reactive power output of the main grid.

5800 In contrast, main grid absorbs the active power outputs of renew-
5600 Profit able energy resources during high power outputs.

5400
5.2. Case II: Comparison of dynamic and fixed pricing schemes-
5200 based demand response
Profit (cents)

5000
In case II, flexible and inflexible loads are used in both schemes
4800 i.e. dynamic and fixed pricing scheme rather than inflexible loads
4600
4400 50
P1 Q1
4200 25
4000
0
3800 40
0 0.5 1 1.5 2 2.5 3 3.5 4 P2 Q2
Active power and reactive power (kW, kVar)

Time (sec) 20
Fig. 10. Profit of the inflexible loads.
0
60
P3 Q3
700 30
Profit
0
40
600 P4 Q4
20
Profit (cents)

0
50
500
P5 Q5
25

0
400 60
P6 Q6
30

300 0
0 0.5 1 1.5 2 2.5 3 3.5 4 0 0.5 1 1.5 2 2.5 3 3.5 4
Time (sec) Time (sec)
Fig. 11. Profit of the inflexible loads. Fig. 13. Active and reactive power outputs of DG1, DG2, DG3, DG4, DG5 and DG6.
238 M.A. Shehzad Hassan et al. / Journal of Cleaner Production 222 (2019) 231e241

50 100
P7 Q7 LP 1 LQ1
50
25

Active and reactive loads (kW, kVar)

0
0 100
40 LP 2 LQ2
50
P8 Q8
Active power and reactive power (kW, kVar)

20 0
100
0 LP 3 LQ3
50 50
P9 Q9 0
25 100
LP 4 LQ4
50
0
50 0
P 10 Q10
100
25 LP 5 LQ5
50
0 0
60 0 0.5 1 1.5 2 2.5 3 3.5 4
Time (sec)
P 11 Q11
30
Fig. 16. Active and reactive power loads of flexible load (load1 to load5).

0
50
According to these figures, the active power outputs of WTs are
P 12 Q12 directly proportional to wind speed. With the passage of time, the
25
active power outputs are gradually increased in DG4 and DG9, and
decreased in DG6 and DG8. The maximum (DG4 and DG9) and
0
0 0.5 1 1.5 2 2.5 3 3.5 4 minimum (DG6 and DG8) active power outputs are observed at t ¼
Time (sec) 4s: In addition, DG1 and DG12 have similar trend with DG4 and
DG9 but maximum active power outputs are observed at t ¼
Fig. 14. Active and reactive power outputs of DG7, DG8, DG9, DG10, DG11 and DG12.

(case I). In this case, the profit of the load customers in dynamic 30
pricing scheme is compared with fixed pricing scheme. LP 6 LQ6
15

5.2.1. Dynamic pricing scheme 0

30
Respectively in Fig. 13 and Fig. 14, active and reactive power
LP 7 LQ7
outputs of uncontrollable DGs (WTs and PVs) are shown. The 15
reactive power outputs of WTs and PVs are zero.
The WTs consists of DG1, DG4, DG6, DG8, DG9 and DG12. 0
30
Active and reactive loads (kW, kVar)

LP 8 LQ8
15
Active power and reactive power (kW, kVar)

150 0
Pg Qg 30
LP 9 LQ9
100 15

0
50 30
LP 10 LQ10
15
0 0
30
LP 11 LQ11
-50 15

0
-100 30
LP 12 LQ12
15
-150 0
0 0.5 1 1.5 2 2.5 3 3.5 4 0 0.5 1 1.5 2 2.5 3 3.5 4
Time (sec) Time (sec)

Fig. 15. Active and reactive power output of the main grid. Fig. 17. Active and reactive power loads of inflexible load (load6 to load12).
 M.A. Shehzad Hassan et al. / Journal of Cleaner Production 222 (2019) 231e241
4s:Regarding PVs, two different active power outputs trend are
analyzed; DG5 and DG7 are similar, and DG2, DG3, DG10 and DG11
are identical. In addition, the maximum (DG5 and DG7) and min-
imum (DG2, DG3, DG10 and DG11) active power outputs can be
seen at. t ¼ 1:5s:
The active and reactive power output of the main grid is shown
in Fig. 15 which have direct relation with load demand and inverse
relation with outputs of renewable energy resources. It can be
explaining as inadequate active power outputs of PVs and WTs are
resulted in high load demand (flexible and inflexible loads due to
dynamic price) which are fulfilled through main grid. Hence, the
increased active power output is observed at initial time period
(Fig. 15). In addition, 25 kW total reactive power of the flexible loads
are supplied by the main grid.
The active and reactive power loads of DG1 to DG12 are pre-
sented in Fig. 16 and Fig. 17. The load1 to load5 are flexible and
load6 to load12 are inflexible loads. In flexible loads, price and load
demand have inverse relation. It can also be seen (Fig. 16) that load
demand varies with different time durations; maximum load de-
mand is observed at t ¼ 2s and minimum load demand at
t ¼ 0  0:5s due to price variations (Fig. 18). Besides flexible load
customers, it also prejudiced the inflexible load customers without
losing their comfort. In previous study (Duong Tung and Le, 2015),
6.5
6
Dynamic price (cents)
5.5
4.5
3.5
3
0 0.5 1 1.5 2 2.5
Time (sec)
Fig. 18. Dynamic pricing scheme.
239
the flexible load customers were charged under regular price which
might not be beneficial for them. Although (Asgher et al., 2018;
Chen et al., 2012; Jiang et al., 2014), have also used dynamic pric-
ing scheme for small residential loads but their findings were not
suitable for large flexible loads. However, the proposed dynamic
pricing scheme is appropriate for both small- and large-scale
flexible load customers.
Fig. 19 demonstrates the profit of the flexible loads. The
maximum load profit (1325cents) is observed at t ¼ 2:2s due to the
low price (3.8cents). The total active flexible loads can be seen from
Fig. 20. According to this figure, the total active flexible load varies
among different time zones based on dynamic price. If the price
signal is high, the flexible load will gradually decrease and vice
versa. In case of more flexible loads, the profit of the flexible loads
will have increased with the passage of time.
5.2.2. Fixed pricing scheme
The fixed pricing scheme is set at 12cents. According to fixed
pricing scheme, the load demand is strictly influenced by price i.e.
the higher price resulted in lower demand. In other words, the load
demand is highly reduced by flexible load customers due to higher
prices during fixed pricing scheme as compared to dynamic pricing
scheme. Consequently, the load profit also reduced (Fig. 21) due to
Dynamic price
3 3.5 4
240 M.A. Shehzad Hassan et al. / Journal of Cleaner Production 222 (2019) 231e241

Active power and reactive power (kW, kVar)

1500
150
Profit
Pg Qg
1400
100
1300
Profit (cents)

50
1200

1100 0

1000 -50

900
-100
800
0 0.5 1 1.5 2 2.5 3 3.5 4
Time (sec) -150
0 0.5 1 1.5 2 2.5 3 3.5 4
Fig. 19. Profit of the flexible loads.
Time (sec)
Fig. 22. Active and reactive power output of the main grid.

250
Total active flexible loads low load consumption by flexible customers in fixed pricing
Total active flexible loads (kW)

scheme. In addition, both flexible and inflexible load customers can

240 lose their comfort. Finally concluded, this scheme is not beneficial
as dynamic pricing scheme for both flexible and inflexible load
customers.
230 The active and reactive power outputs of WTs and PVs are same
in both pricing schemes (dynamic and fixed pricing schemes). The
behavior of active and reactive power output of the main grid
220 varies; the injection (Fig. 15) in case of dynamic pricing scheme is
due to continuous load demand and absorption (Fig. 22) in fixed
pricing scheme is because of reduction in load demand.
210
6. Conclusions

200 This paper aims at profit maximization for both flexible and
0 0.5 1 1.5 2 2.5 3 3.5 4 inflexible load customers. For this purpose, the dynamic pricing
Time (sec) scheme for demand response in microgrids is designed which
Fig. 20. Total active flexible loads.
utilizes the renewable energy resources and main grid in efficient
way. The demand response optimization problem in this scheme
has been solved through PSO algorithm. The PSO algorithm is used
because of its higher efficiency and accuracy as compared to others
80 algorithm.
Profit Two main cases are utilized in order to check the performance of
the proposed dynamic pricing scheme through simulation results.
70 In case I, the dynamic and fixed pricing schemes are utilized for
inflexible loads and their results are compared. The simulation
results of case I elaborated that the profit of load customers through
dynamic pricing scheme is higher than fixed pricing scheme. In
Profit (cents)

60
case II, flexible and inflexible loads are used in dynamic and fixed
pricing schemes. In this case, the profit of flexible load customers is
also higher in dynamic pricing scheme as compared to fixed pricing
50
scheme. Comparatively, the dynamic pricing scheme is cost saving
for inflexible load customers as compared to fixed pricing scheme.
In all, it is concluded that dynamic pricing scheme is relatively more
40 beneficial for flexible and inflexible load customers in both cases.
Furthermore, this scheme can easily be implemented in present
market infrastructure without any additional substitution.
30
0 0.5 1 1.5 2 2.5 3 3.5 4
Time (sec) Conflicts of interest

Fig. 21. Profit of the flexible loads. There are no conflicts of interest to declare.
 M.A. Shehzad Hassan et al. / Journal of Cleaner Production 222 (2019) 231e241
Acknowledgement
This work was supported in part by the Science and Technology
Project of State Grid Zhejiang Electric Power Company (under Grant
No. 5211W4180001) and in part by the National “111” Project of
China (under Grant No. B08036).
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