Cost minimization by optimization of electricity generation and demand side management

This paper deals with the mathematical optimization of electricity generation of a domestic energy system with different electricity generation systems: a small combined heat and power (CHP) plant, a battery system, and a photovoltaic (PV) system, and simultaneously the optimization of shiftable electric loads. Due to the intermittent availability of renewable sources it is necessary to store the surplus energy in times of higher generation and to provide energy in times of lower generation. Currently electricity storage systems are not economically well developed to store high amounts of energy for long periods of time. An alternative option to expensive electricity storage would be to shift electric loads into periods of time high electricity generation which would be more efficient and cost saving. In fact, beside the optimization of electricity generation it is also possible to optimize simultaneously the electric shiftable loads. This method should not only be cost saving and effective but more efficient compared to the conventional demand side management methods (DSM). In the traditional DSM method, the peak demand is moved in times of lower demand, which not necessarily is the most cost saving method. The optimization should reduce the total costs of the entire system.