Price-Based Residential Demand Response Management in Smart Grids:A Reinforcement Learning-Based Approach

This paper studies price-based residential demand response management(PB-RDRM)in smart grids,in which non-dispatchable and dispatchable loads(including general loads and plug-in electric vehicles(PEVs))are both involved.The PB-RDRM is composed of a bi-level optimization problem,in which the upper-level dynamic retail pricing problem aims to maximize the profit of a utility company(UC)by selecting optimal retail prices(RPs),while the lower-level demand response(DR)problem expects to minimize the comprehensive cost of loads by coordinating their energy consumption behavior.The challenges here are mainly two-fold:1)the uncertainty of energy consumption and RPs;2)the flexible PEVs’temporally coupled constraints,which make it impossible to directly develop a model-based optimization algorithm to solve the PB-RDRM.To address these challenges,we first model the dynamic retail pricing problem as a Markovian decision process(MDP),and then employ a model-free reinforcement learning(RL)algorithm to learn the optimal dynamic RPs of UC according to the loads’responses.Our proposed RL-based DR algorithm is benchmarked against two model-based optimization approaches(i.e.,distributed dual decomposition-based(DDB)method and distributed primal-dual interior(PDI)-based method),which require exact load and electricity price models.The comparison results show that,compared with the benchmark solutions,our proposed algorithm can not only adaptively decide the RPs through on-line learning processes,but also achieve larger social welfare within an unknown electricity market environment.