A framework for the management of distributed energy resources to address the imbalance between electricity supply and demand based on social welfare maximisation

The authors propose a calculation method of parameters to manage distributed energy resource (DER). The proposed method takes into account the balance between power supply and demand. This paper, first, formulates the power transaction between retail electricity suppliers, especially those with the function of energy resource aggregators, and their customers under a framework of social welfare maximisation (SWM). In theory, the customers consume electricity to maximise their economic surplus under given retail electricity prices. The SWM framework enables us to measure the value of changes in the customers’ surplus resulting from cooperation in the DER management. On the basis of this characteristic, second, the authors derive rebate levels as the parameters in the DER management. The authors’ proposal benefits both the retailers and the customers.