Demand response and supply optimization in smart grids with renewable energy sources

Smart grid is an electrical grid that uses information and communications technology to improve efficiency, reliability, economics, and sustainability of production and distribution of electricity. In this thesis, we study demand response, supply management and power scheduling in a smart grid in the presence of renewable energy sources aiming to increase efficiency and reliability of the grid by limiting the probability of energy shortfall which is introduced to the system with the uncertainty in the renewable energy production. In our setup, the energy provider can decide the amount of outage risk to be taken by adjusting the limit on the probability of energy shortfall. In this decision, the provider compares the cost of renewable energy production, which is greater than scheduled power production, with the cost of purchasing power from outside sources. During the process total social welfare, defined in terms of consumer utility and total cost of power imposed on the provider, is maximized. Consumer and provider sides' reactions are analyzed under changing probability of outage limits. In addition, the behavior of both supply and demand side are investigated under changing cost parameters and optimal consumption and production schedules are offered.