A novel optimization model for integrating carbon constraint with demand response and real-time pricing

Since the global warming has recently become more severe causing many serious changes on the weather, economy, and society worldwide, lots of efforts have been put forward to prevent it. As one of the most important energy sectors, improvements in electric power grids are required to address the challenge of suppressing the carbon emission during electric generation especially when utilizing fossil-based fuels, while increasing the use of renewable and clean sources. This paper hence presents a novel optimization model for tackling the problems of optimal power scheduling and real-time pricing in the presence of a carbon constraint while taking into account a demand response possibility, which may provide a helpful method to limit the carbon emission from conventional generation while promoting renewable generation. The critical aspects include explicitly integrating the cost of emission with the total generation cost of conventional generation and combining it with the consumer satisfaction function. As such, conventional generation units must carefully schedule their power generation for their profits, while consumers, with the help from renewable energy sources, are willing to adjust their consumption to change the peak demand. Overall, a set of compromised solution called the Pareto front is derived upon which the conventional generating units choose their optimal generation profile to satisfy a given carbon constraint.