Distributed generation planning for diversified participants in demand response to promote renewable energy integration

In modern distribution system, the distribution system operator (DSO) acts as a market facilitator and data manager as well as an energy supplier and operation controller. In this circumstance, the DSO should comprehensively consider the diversified participants of the modern distribution system when making investment decisions of distributed generation (DG). This paper proposes a DG planning model considering the behavior of the diversified participants, which are motivated to cooperate with distributed renewable energy resources to promote their integration, and to achieve the optimal DG investment plan. The optimization model takes a centralized structure but fully considers the preferences, profits and comfort levels of the aggregators and consumers. The model is linearized into a mixed-integer linear programming (MILP) problem and is solved by CPLEX. Results of the case study show that when the DSO spares subsidies to the aggregators and consumers to encourage their participation in demand response (DR) programs, it earns more compared with providing no subsidies for DR participation. It is also demonstrated that the overall profit increases as the subsidies increase within a certain range, but decreases when the subsidies exceed this range. Therefore, the DSO needs to carefully choose the subsidization level to achieve the optimal utilization of renewable energy and demand flexibility. The optimal subsidization level is derived from the model proposed in this paper. Therefore, this paper puts forward a new pattern to utilize the distributed renewable energy sources, and provides guidance in policy making and DR program implementation.