Using Cluster Analysis and Dynamic Programming for Demand Response Applied to Electricity Load in Residential Homes

Abstract

This paper develops means to analyze and cluster residential households into homogeneous groups based on the electricity load. Classifying customers by electricity load profiles is a top priority for retail electric providers (REPs), so they can plan and conduct demand response (DR) effectively. We present a practical method to identify the most DR-profitable customer groups as opposed to tailoring DR programs for each separate household, which may be computationally prohibitive. Electricity load data of 10,000 residential households from 2017 located in Texas was used. The study proposed the clustered load-profile method (CLPM) to classify residential customers based on their electricity load profiles in combination with a dynamic program for DR scheduling to optimize DR profits. The main conclusions are that the proposed approach has an average 2.3% profitability improvement over a business-as-usual heuristic. In addition, the proposed method on average is approximately 70 times faster than running the DR dynamic programming separately for each household. Thus, our method not only is an important application to provide computational business insights for REPs and other power market participants but also enhances resilience for power grid with an advanced DR scheduling tool.