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Consequently, the demand side management (DSM) optimization becomes a promising solution for matching demand and supply including volatile generation and flexibility on the demand side. Concepts such as Demand Response (DR) are the main core of many research activities. The analysis and optimization on the demand side focuses on the involvement of the customer and fits to the vision of a customer centric energy grid.

Demand Side Management and Demand Response

We define DR as part of DSM similar to [1] and [2], as the “voluntary changes by end-consumers or producers or at storages of their usual electricity/gas flow patterns - in response to market signals such as time-variable prices, incentive payments” or beforehand given agreements between customers and third parties. Such pattern changes are possible due to flexibility on the demand side. Such flexibility might be provided for example through electrical or thermal storages where demand is decoupled from generation, but also from other flexible loads, such as EVs.

Direct Load Control vs. Indirect Load Control

In general DSM and DR concepts can be distinguished between direct and indirect load control. Indirect load control implies an incentive, such as a price signal. Such signal might motivate the consumer to shift its consumption into times of lower prices. Direct load control rather means an agreement between the customer and a third party that allows the party to directly control the loads of the customer based upon the beforehand made agreement [3].


Several recent research activities that use mathematical optimization techniques for DR refer both to direct and indirect load control. These research topics are related to the optimization and coordination of the operation supply and demand units throughout a time horizon, e.g. an offline day-ahead scheduling under consideration of flexibility. The flexibility is achieved through temporal shifts over a Horizon T. Such problems are very generally known as the Portfolio Balancing problem.

Demand Side Management in different time horizons (short to long term)

The classic unit commitment problem is mainly short term but can be solved also for medium and long term problems. As shown in fig. 1, similarly as presented in [1], we can distinguish Demand Side Management according to its time line.


Considering further long term DSM, energy efficiency yields on minimizing the energy consumption on the demand side through usage of more efficient components and systems rather than on scheduling processes. Authors in [1] in particular emphasizes that first motivation should always be on energy efficiency optimization since most of the short- and medium term DR concepts only shift energy in time. 

Challenges and Requirements for Demand Side Management and Demand Response in Optimization:

The above mentioned general description of the portfolio balancing problem for city districts and neighborhoods incorporate several challenges both for the mathematical method and the overall approach. First, there is usually a high heterogeneity of participants and devices that must be taken into account. Residential buildings, but also industrial consumers might take part of the portfolio balancing. The load and flexibility of such units diversify within their granularity of time, their amplitude and their criticalness. Second, a city district contains in general a high number of participants and devices which lead to a computational intensive problem with an increasing portfolio size. Consequently, a mathematical optimization must be able to handle a large amount of heterogeneous participants. Third, referring to the concept of demand response and in particular to direct load control, it is an important requirement for the method to ensure data privacy. Fourth, the coordination within city districts usually needs to integrate both local (customer) and global (system) level objectives. In respect to this challenge the method requires an approach for both satisfying global and local objectives. Fifth, depending on the kind of installed devices on the demand side the mathematical optimization method might have to be able to take care of on/off devices leading to an Integer related problem formulation.

Research Paper and Solver

Indirect load control on the demand side is for example studied in [5] and [6]. In particular [6] is a very recent example for showing the operation scheduling of Plug-in electric vehicles coordinated by an aggregator agent. The MILP is solved within GAMS Build 21.1.2. using the CPLEX 12.5.1 solver [7].


The residential demand side energy management in [14] for example used the matlab environment in combination with ILOG CPLEX 12.2 to solve the optimization problems. The ADMM problems were solved using CVX, a package for specifying and solving convex programs [15], [16]. Looking into integer related problem formulations authors in [17] propose a column generation approach for direct load control which is solved using the object-oriented Python Interface of Gurobi [18]. Research in [10] performs a decentralized robust ILP optimization for balancing a portfolio within a microgrid. The optimization uses the CPLEX package within Java. Both [17] and [10] are other examples for satisfying all mentioned challenges 1) - 5) and the resulting requirements. [19] uses a MILP formulation for the optimal control of a residential microgrid using the Gurobi solver as well through the object-oriented interface for Java. Further, authors in [20] perform a distributed optimization via a multi-agent system using the Java agent development framework (JADE) [21]. However, each local agent solves its own local MILP optimization using MOSEK [22].


[1] P. Palensky and D. Dietrich, “Demand Side Management: Demand Response, Intelligent Energy Systems, and Smart Loads,” Industrial Informatics, IEEE Transactions on, vol. 7, no. 3, pp. 381–388, 2011.

[2] Smart Grid Task Force, “Regulatory Recommendations for the Deployment of Flexibility: SGTF-EG3 Report,”, 2015.

[3] Morten Juelsgaard, “Utilizing Distributed Resources in Smart Grids A Coordination Approach: A Coordination Approach,” Dissertation, Aalborg University, Denmark, 2014.

[4] OpenADR Alliance. Available: (2016, Feb. 19).

[5] A. Safdarian, M. Fotuhi-Firuzabad, and M. Lehtonen, “A Distributed Algorithm for Managing Residential Demand Response in Smart Grids,” IEEE Trans. Ind. Inf, p. 1, 2014.

[6] I. Momber, S. Wogrin, and Gomez San Roman, T, “Retail Pricing: A Bilevel Program for PEV Aggregator Decisions Using Indirect Load Control,” Power Systems, IEEE Transactions on, vol. 31, no. 1, pp. 464–473, 2016.

[7] IBM Corporation, IBM CPLEX Optimizer - United States. Available: (2016, Feb. 18).

[8] N. Rahbari-Asr and M.-Y. Chow, “Cooperative Distributed Demand Management for Community Charging of PHEV/PEVs Based on KKT Conditions and Consensus Networks,” IEEE Trans. Ind. Inf, vol. 10, no. 3, pp. 1907–1916, 2014.

[9] del Real, Alejandro J, A. Arce, and C. Bordons, “An Integrated Framework for Distributed Model Predictive Control of Large-Scale Power Networks,” IEEE Trans. Ind. Inf, vol. 10, no. 1, pp. 197–209, 2014.

[10] E. Kuznetsova, C. Ruiz, Y.-F. Li, and E. Zio, “Analysis of robust optimization for decentralized microgrid energy management under uncertainty,” International Journal of Electrical Power & Energy Systems, vol. 64, pp. 815–832, 2015.

[11] Elizaveta Kuznetsova, “Microgrid Agent-Based Modelling And Optimization Under Uncertainty,” Dissertation, Universite de Versailles, 2014.

[12] M. Kraning, E. Chu, J. Lavaei, and S. P. Boyd, Dynamic network energy management via proximal message passing.

[13] Y. J. Jhi and M. D. Ilic, “Multi-Layered Optimization Of Demand Resources Using Lagrange Dual Decomposition,” Smart Grid, IEEE Transactions on, vol. 4, no. 4, pp. 2081–2088, 2013.

[14] B. Moradzadeh and K. Tomsovic, “Two-Stage Residential Energy Management Considering Network Operational Constraints,” IEEE Trans. Smart Grid, vol. 4, no. 4, pp. 2339–2346, 2013.

[15] Michael Grant and Stephen Boyd, CVX: Matlab software for disciplined convex programming, version 2.0 beta.

[16] Michael Grant and Stephen Boyd. Graph implementations for nonsmooth convex programs, Recent Advances in Learning and Control (a tribute to M. Vidyasagar), V. Blondel, S. Boyd, and H. Kimura, editors, pages 95-110, Lecture Notes in Control and Information Sciences, Springer, 2008.

[17] H. Harb, J.-N. Paprott, P. Matthes, T. Schütz, R. Streblow, and D. Müller, “Decentralized scheduling strategy of heating systems for balancing the residual load,” Building and Environment, vol. 86, no. 0, pp. 132–140,, 2015.

[18] Gurobi, Gurobi Optimization, Inc. Available: (2015, Jun. 15).

[19] P. O. Kriett and M. Salani, “Optimal control of a residential microgrid,” Energy, vol. 42, no. 1, pp. 321–330, 2012.

[20] N. Blaauwbroek, P. H. Nguyen, M. J. Konsman, Huaizhou Shi, Kamphuis, R. I. G, and W. L. Kling, “Decentralized Resource Allocation and Load Scheduling for Multicommodity Smart Energy Systems,” Sustainable Energy, IEEE Transactions on, vol. 6, no. 4, pp. 1506–1514, 2015.

[21] Telecom Italia SpA, Jade Site | Java Agent DEvelopment Framework Available: Available: (2016, Feb. 18).

[22] MOSEK ApS MOSEK Optimization Toolbox [Online]. Available: Available: (2016, Feb. 18).


Michael Diekerhof, RWTH Aachen University