Quadratic Programming for Demand-Side Management in the Smart Grid

Demand-Side Management (DSM) is an effective means to optimize resource utilization in the electricity grid. It makes the electricity consumption pattern of users more even, reducing the Peak-to-Average demand Ratio (PAR) in the power system. The utility company can monitor and shape the hourly electricity consumption of the users by adopting an appropriate pricing strategy and advertising it online exploiting the underlying Smart Grid infrastructure. On the other hand, the users can monitor the hourly price of electricity in the market and based on the price variation, they can schedule their appliances to minimize their electricity payment, without compromising their daily need. In this paper, we consider a DSM problem where the company adopts a quadratic pricing strategy to encourage the users to have a flat consumption pattern. We formulate the problem incorporating Quadratic Programming (QP). The simulation results show that the QP approach reduces the PAR drastically.