Impact of maximized utility benefit based on customer willingness for economic operation of a grid connected microgrid system

Optimal scheduling of distributed energy resources (DERs) to obtain a minimized generation cost of a low voltage (LV) microgrid (MG) system has always gravitated the power system optimization researchers. This paper proposes a dual level optimization framework which emphasizes on maximizing the DISCOM profit in the first level and later minimizes the generation cost of the MG system. The MG system considered for the study consists of renewable energy sources, fossil fueled generators, micro turbine and fuel cell and the cost components involve depreciation cost, fuel cost, penalized emission cost and operation and maintenance (O&M) cost. An incentive based demand response (IBDR) policy is implemented which utilizes customer's willingness to curtail their load demands and offers incentives for the same. When the DISCOMs share of profit is maximized using IBDR policy in level one, the modified load demand of the MG system obtained by deducting the curtailed load from the forecasted load is considered to minimize the generation cost of the MG system in the second level. A recently developed swift and facile Arithmetic optimization algorithm (AOA) is used as optimization tool for the study. The maximum DISCOM benefit was found to be 211[Formula presented] when the customers curtailed 105 kWh energy as per their willingness. Literatures reported the minimum power generation cost of the MG system as 880[Formula presented], 871[Formula presented] and 807[Formula presented] for base load, load shifting based demand side management (DSM) and customer incentive-based DR policies respectively. The proposed IBDR policy outperformed the reported literatures with a minimal generation cost of 768[Formula presented]. Measures of central tendencies also corroborate to the robustness and efficiency of AOA.