Abstract
A key feature of future smart grids is demand response. With the integration of a two-way communication infrastructure, a smart grid allows its operator to monitor the production and usage of power in real time. Upon detection of significant events, the operator may send requests to intelligent loads to curtail their power usage. The operator can use load curtailments reactively for adaptation to the loss of generation capacity (e.g., with unpredictable renewable energy sources), or proactively for profit maximization by avoiding the use of expensive energy sources during peak hours. In this paper, we optimize operator profits for the different cases of load curtailment, under various practical constraints including the physical properties of the power system, and different cost and valuation functions for heterogeneous generation units and loads, respectively. We also investigate the requirements imposed by different cases of the load curtailment on the cyber infrastructure. In particular, we evaluate how the delay of cyber control impacts the frequency stability of the power grid during the load curtailment phase.