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Home Energy Management System

Technical Report · May 2014

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 Home Energy Management System
Cesar Roda- crroda@mtu.edu , Kunal Chitnis- knchitni@mtu.edu, Joseph Peterson- jpeters@mtu.edu , Jim
Schwaderer- jrschwad@mtu.edu , John Town- jctown@mtu.edu
Adviser: Chee-Wooi Ten- ten@mtu.edu
MICHIGAN TECHNOLOGICAL UNIVERSITY
Electrical & Computer Department

Abstract—this paper covers research on the transformation of a definite start and stop time are usually bigger appliances, like
Home Energy Management System from current to future a clothes-washing machine [2].
technology. This paper also discusses the positive impact of After the HEMS model the consumer demand, it will begin
HEMS to GHG emissions and impact to bulk electric system in
to optimize costs. Through proprietary algorithms (and after
meeting the load demand during normal and critical operation.
The negative impact and complication of HEMS to energy
receiving energy cost information from the utility) the HEMS
market are also touched. will be able to schedule flexible loads to periods of lower
energy costs. Another way an HEMS reduces costs is through
Index Terms—Demand Response, Home Energy Management, heating and cooling management. For example, a sudden
HEMS, Smart Grid, And Bulk Electric System. change in ambient temperature could cause an unmanaged
heating unit to respond immediately. This could create a high
I. INTRODUCTION demand during a period of high energy costs. An HEMS is cost
Electric Energy Utilities are under pressure from annual aware, and it would restrain the heating unit, spreading this
increases in customer demand. In the past, utilities used system response out over a few hours. A slower response to a change
expansion to meet this rise in demand. Economic restrictions in ambient temperature may still provide a comparable level of
now prevent utilities from expanding existing transmission and comfort to the consumer; with a lower cost.
distribution systems while a growing concern in greenhouse
gas (GHG) emissions has prevented the expansion of fossil fuel
generation facilities. With the elimination of past solutions a
new philosophy must be adopted. Smart Grid Technology,
communications infrastructure, and clean energy technologies
will be required to meet the increasing in consumer demand.1].
An HEMS is designed to optimize consumer costs by
managing consumer demand, communicating with the utility to
determine the market price of energy, and calculating the use
of local generation to off-set remote generation costs. This
behavior allows the utility to help direct consumers into
“smarter” choices for the grid. This is done by “rewarding"
responsible decisions with lower price per kWh and
“punishing” poor decisions with higher price per kWh. It gives Figure-1: Interconnected EMS Solution
the utility the ability to proactively account for system
conditions (planned outages, load shifting, etc). The utility’s
II. CURRENT HEMS APPLICATIONS AND TECHNOLOGY
ability to shape the demand profile will result in efficient use of
the power grid. This effectively increases the utility’s Once a customer has an HEMS installed they will be able
generation and transmission capacity to meet the rising to communicate and interact with the utility. In New Zealand,
consumer demand – while avoiding system expansion and utilities use a ripple plants to control consumer appliances and
GHG emissions. reduce costs [3]. Home appliances are connected to meters (or
The HEMS is installed in a home and works by modeling relays) that receive on-off signals sent from the ripple plant.
the consumer demand for that home. A fixed load is used to During peak demand the ripple plant may send an “off signal”
represent appliances that must operate at a certain time of day to the meter which will shut off electric water heaters. During
and cannot be interrupted. Thermal loads and loads that have a off-peak hours, the ripple plant will send “on signal” and the
definite start and stop time (but are not critical to the meter will turn the water heats back on. This type of energy
consumer) are considered flexible. A thermal load will respond management system provides consumers with lower costs and
to changes in the ambient air temperature and adjust a heating the utility to optimize its power grid [4].
or cooling according to a consumer’s comfort level. Loads with
 DTE Energy also has two interruptible rates for home
owners. One is for air conditioning and the other is for electric
water heaters. There is a separate meter for each rate. If there
is an energy supply emergency then DTE can turn off the air
conditioning and water heater loads to relieve the system [5].
Schneider Electric’s “Wiser Home Management System”
contains the following components: mobile app and web
portal; a coordinator, smart thermostats; smart plug; load
control; panel meter; EV charger and solar inverter; and in-
home display. The mobile app and web portal allow the home
owner to monitor and control their energy usage from a mobile
phone or computer. Data from the devices is uploaded to the
cloud via the coordinator. Temperature is controlled with the
smart thermostat, which adjusts the settings based on your
lifestyle. Small appliances and light fixtures can be controlled
with a smart plug. For larger loads like HVAC, pool pumps, or
electric water heaters a load controller would be used. This
product line is available both in the USA and Europe [6].
III. FUTURE TECHNOLOGY
The foundation for future technology is a communications
systems consisting of home servers and a system complex
servers used by the utility [7]. This will allow consumers to
optimize both the use of renewable energy and their total
demand. The servers will collect data from the HEMS and
environmental sensors. Energy costs can then be managed by a
hybrid use of renewable and fossil fuel energy. As the use of
smart grid increases, different servers and types of EMS will be
interconnected. As they are able to work together power
systems operations will further be optimized. This type of
interconnection can be considered a smart network.
Various network solutions have been introduced to
facilitate the use of smart networks on the distribution system.
Prominent solutions include: WPAN and the WisReed.
WPAN works by allowing the complex server to collect usage
and appliance status data. Then the complex server
communicates with the home server, which controls the in-
home appliances; adjusting their use to optimize costs. Wisreed
is used for the automatic construction of a network without any
settings. It can self-restore a network through auto-reroute
features; adapting to the changing environmental conditions
[1].
Products such as smart sensing platform (SSPF) help
establish networks in home or business EMS. SSPF is intended
to simplify the complex communication standards that have
been independently defined by different industry areas [1]. It
improves system efficiency by targeting power saving
appliances such as solar panels, EV chargers and fuel cells are
in a network, and simplifying their network controls.
Cloud-EMS stores collected demand-data in reliable cloud
platform so it can be centrally managed. This allows an EMS
to provide a daily demand forecast for the consumer. This is
not limited to reducing costs for home owners. Businesses
could use this to consider precautionary measures such as
relying on energy storage devices or generating power
internally for times of peak power consumption. Peak Power
Demand Reduction (PPDR) technology enables cloud-based
control of distributed energy storage devices for reducing peak-
power demand. PPDR technology has been tested in an office
environment. The PPDR was allowed to control the
charging/discharging of existing personal computer (PC)
batteries. This test showed PPDR reduced approximately10%
of peak power demand from plugged loads [1] [8].
Figure-2: Peak Power Demand Reduction utilizing
distributed batteries
DR technology works by compensating consumers to
curtail their load when a utility is a generation capacity.
Development of a demand response automation server (DRAS)
prototype is underway. This system is compliant with the
international DR standard: Open ADR 2.0a. DRAS is enables
utilities and customers to automatically send and receive
control information (DR signals). For example, a utility could
send a command to the DRAS for load curtailment. The DRAS
would then communicate with several HEMS to determine
which in-home appliances is DR compliant. Load will be
curtailed automatically, by turning off appliances according to
pre-defined settings made by each customer.
Integration of HEMS with DR is becoming popular
worldwide. In the US, Toshiba has completed a full scale test
operation of a smart grid in New Mexico [9]. The project
advanced the development of HEMS to optimize DR signals,
predicting PV generation output, and forecasting home power
demand. Toshiba is also working on the largest project in Japan
that involves integration of Building Energy Management
System and HEMS with utility’s EMS and DR. The project
covers three (3) large areas in Yokohama with more than
420,000 people in 170,000 households [10].
IV. HEMS BENEFITS TO THE POWER SYSTEM
HEMS offer a wide horizon of automation in the residential
electric system that will reduce electric energy consumption.
Consequently, this will lower costs for the utility and the
consumer. Residential customers with HEMS results in a
reduction of the base load and peak demand. The term “base
load” refers to the minimum amount of power that the electric
utility must make available to its customer [11].The term “peak
demand” refers to the highest amount of electricity being
consumed at any one point in time across a utility’s networked
system [11].With the reduction of electricity demand, the
power utility will have a better opportunity to select the least
expensive generators to use during the day-to-day operation –
reducing the cost of electricity. In the long run this reduction of
demand will decrease the need for expansion of existing
equipment or building additional generating plants and
transmission lines.
The cost of electricity is not exclusively due to the costs of
generation or system expansion. Transmission lines have
loadability limits and can become congested [2].A regional
transmission operator (RTO) – like MISO --is responsible for
managing this congestion. This means that a scenario will exist
when the cheapest transmission line between a GENCO and a
consumer is not available. It should be noted that this part of
the power market is complicated, but an RTO, under various
conditions, can impose additional costs on electricity [12].This
is why HEMS use with DR is so important. The GENCO or
RTO will have the ability to help shape the demand profile,
reducing transmission line congestion, and again reducing costs
for the consumer [2].
Another benefit the reduction of electric energy
consumption provides is the diminution of greenhouse gas
emission (GHG). The majority of GHG emissions released by
utilities are by the fuel being used to run the generating units --
specifically, coal-fired power plants [13].HEMS will help with
the reduction of GHG in three ways. The first it will directly
reduce the overall demand. In other words, the use of coal-fired
plant will be reduced. The HEMS will reduce peak demand.
This decreases the probability of fossil fueled “peaker” plants
being called upon to operate -- Peaker plants are significant
producers of GHG emissions [13]. The final way HEMS will
help in the reduction of GHG emissions is through the
integration of local, renewable energy – which will off-set the
higher costs associated with using (relatively) expensive
remote generation.
V. THE NEGATIVE IMPACTS AND COMPLICATIONS OF HEMS
TO THE POWER SYSTEM
The Large-scale installation of HEMS on a power system
has several challenges. This report will focus on a single
challenge: market pricing methods. Connecting the consumer
to the whole-sale power market can create price volatility and
in severe cases system instability [14]. The problems created
by an HEMS installation are specific to the type of pricing
method used by GENCO.
Time of use (TOU) and critical peak pricing (CPP) are two
typical market price models used by GENCOs to reduce on-
peak demand. This is done through setting prices high when
on-peak demand is forecast to be high and to setting prices low
when the off-peak demand is forecast to be low. These prices
are fixed ahead of the market. When the consumer begins using
HEMS, they are optimizing their costs. A straightforward
approach for a consumer to minimize their cost is by shifting
demand to off-peak energy prices. If all connected consumers
adopt this strategy, a second demand peak will be created
during off-peak hours. This peak is referred to as a “rebound
peak.” A rebound peak occurs during low TOU (or CPP)
pricing periods and can often be greater than the demand peak
for the same system without HEMS [15]. The rebound peak
reduces the GENCO’s profit and can potentially ruin fixed
pricing methods.
Dynamic pricing methods, such as real-time pricing (RTP),
can have severe effects on system pricing and stability. As
consumers (via HEMS) participate in a RTP whole-sale market
a closed-loop feedback system is created in the power system
[16]. The use of RTP in conjunction with HEMS may cause
prices to oscillate or become volatile [14].
One RTP market type forces the GENCO to calculate its
marginal operational costs (λ) for the next time interval so that
it can meet the forecast the demand. The GENCO is assuming
the risk of price uncertainty in this market type. If the actual
consumer demand is greater than the forecast demand, the
GENCO will lose money. It should be noted that an RTO may
have to reimburse the GENCO, based on a prior agreement.
For simplicity, further RTO activity will be excluded.
The second market type allows the GENCO to calculate λ
after the market has cleared. In other words, the GENCO may
calculate λ using the actual demand for that time interval. In
this RTP market type the consumer is forced to predict λ and
will assume the risk of price uncertainty. The consumer
schedules their demand using their predicted λ, and if the actual
λ is higher than predicted, the consumer will pay more.
This report will only examine the first market type
described, for brevity. Examining the similarities between each
market type will reveal that both have the same, inherent
problem. In either market type, one market participant is forced
to forecast the market, while the other participant is allowed to
respond to the market in real time. This asymmetrical market is
what creates the closed-loop feedback.
This asymmetry in the market is not a problem by itself.
The behavior of each market participant must be examined.
Each participant’s behavior can be predicted: they seek to
maximize their own value within the whole-sale market. The
behavior of the Consumer and the GENCO may be modeled as
two separate objective functions:
.
, ∗
dk: The net value for actual consumer consumption at time k
v (x): the dollar value for consuming (x) kW-hr at time k
λk : The marginal cost in $/kW-hr
xk: the amount of kW-hr consumed at time k
Equation 1: The consumer’s objective function [16]
∗
sk: the GENCO’s net value for the kW-hr produced at time k
ci(x): The Cost-function of the GENCO, evaluated for the
production of (x) kW-hr
Equation 2 The GENCO’s objective function[16]
As stated previously, in this RPT market, only the
consumer knows the value of dk at time interval k. The
GENCO calculates the value of λk assuming dk is equal to dk-
1. After time interval k, clears, the GENCO receives the value
of dk which it will use to calculate (and announce) λk+1. With
this understanding, the asymmetrical market dynamics may be
modeled mathematically:
[2]
(a): ̂ (b): ̂ agent-based home energy management system for smart grids
Equation 3 (a) – The GENCO’s forecast power
production [16]. (b) – The optimal market price announced by
[3]
the GENCO [16]
As market conditions fluctuate, the market prices can [4]
become unstable. For example, when the GENCO predicts
(and sets) the market price λk from dk – 1 the HEMS will
schedule dk to be greater than dk-1. The HEMS will behave in
this manner because it determines the best value for the
consumer by maximizing equation1. The HEMS is buying a lot [5]
of power at a lower rate. After time interval k, clears, the
GENCO will predict (and set) the market price based on dk ,
which has increased from time interval k-1. The GENCO
“sees” the increase in demand as beneficial despite earning a
loss for time interval k. The GENCO does this because it [6]
maximizes equation 2 to determine its best value. The GENCO
will set λk + 1 by predicting dk + 1from the value of dk(it will
set dk+1 will equal dk).The GENCO expects to generate a [7]
profit when time interval k+1 clear. However, if the consumer
demand is still not met, the HEMS will schedule dk + 1 to be
greater than dk because it still provides the best value to the
[8]
consumer. This will again cause the GENCO to post a loss for
the time interval. Depending on various market conditions, this
process could continue for several time intervals. This is what
creates the price divergence, market volatility, and system [9]
instability [14].
[10]
Equation 4 price and system stability criteria [16]
[11]
VI. CONCLUSION
HEMS can be used to provide voltage stability; reduce
generation or consumer costs; and reduces GHG emissions. To [12]
avoid price volatility extensive studies are required to
determine consumer consumption patterns and system stability
before consumers will be allowed to participate in the RTP
market. The future of HEMS is tied to the development of [13]
“Smart Gird” technology, specifically the communications
infrastructure.
HEMS technology will be adopted and become increasing
popular. It also reduces the burden power utilities currently [14]
face while utilizing “Smart Grid” infrastructure – which is
already popular. More importantly, consumers will be driven to
reduce their power bill, forcing them to adopt HEMS
technology. [15]
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Algorithm for Intelligent Home Energy Management and

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