We utilize a for-profit aggregator-based residential demand response (DR) approach to the smart grid resource allocation problem. The aggregator entity, using a given set of schedulable residential customer assets (e.g., smart appliances), must set a schedule to optimize for a given objective. Here, we consider optimizing for the profit of the aggregator. To encourage customer participation in the residential DR program, a new pricing structure named customer incentive pricing (CIP) is proposed. The aggregator profit is optimized using a proposed heuristic framework, implemented in the form of a genetic algorithm, that must determine a schedule of customer assets and the CIP. To validate our heuristic framework, we simulate the optimization of a large-scale system consisting of 5555 residential customer households and 56 642 schedulable assets using real-pricing data over a period of 24-h. We show that by optimizing purely for economic reasons, the aggregator can enact a beneficial change on the load profile of the overall power system.

Smart homes hold the potential for increasing energy efficiency, decreasing costs of energy use, decreasing the carbon footprint by including renewable resources, and transforming the role of the occupant. At the crux of the smart home is an efficient electric energy management system that is enabled by emerging technologies in the electricity grid and consumer electronics. This paper presents a discussion of the state of the art in electricity management in smart homes, the various enabling technologies that will accelerate this concept, and topics around consumer behavior with respect to energy usage.