Price-Based Distributed Scheduling of Flexible Demands in Energy Communities

Minjae Jeon, Lang Tong, Qing Zhao

We study price-based distributed scheduling of flexible demand in an energy community, where a coordinator broadcasts electricity prices and individual households schedule their consumption. Household demand includes deferrable and non-deferrable loads, such as electric vehicle charging with completion deadlines and thermostatically controlled loads. The coordinator transacts with a distribution utility on behalf of community members under the regulated Net Energy Metering tariff. We formulate distributed demand scheduling as a bilevel stochastic dynamic program. The upper level optimizes the coordinator's pricing policy to minimize the community's energy costs subject to operating, revenue adequacy, and individual rationality constraints. The lower level involves stochastic dynamic programs that maximize households' consumption benefits subject to the availability of renewable generation. The computational cost of such a distributed stochastic dynamic program is prohibitive in general. By uncovering the structure of optimal centralized scheduling, we derive Threshold Pricing Rule (TPR) -- a simple community pricing policy with linear computational costs for the upper- and lower-level optimizations. Being independent of parameters of the underlying stochastic dynamic program, TPR is robust against modeling uncertainties and is shown to guarantee revenue adequacy for the community and individual rationality for community members. As the community size grows, TPR is shown to be asymptotically optimal.