Stability Concerns for Indirect Consumer Control in Smart Grids

Demand side management will be an important tool for maintaining a balanced electrical grid in the future, when the penetration of volatile resources, such as wind and solar energy increases. Recent research focuses on two different management approaches, namely direct consumer control by
an external third party, and indirect consumer control through incentives and price signals. In this work we present a simple formulation of indirect control, where the behavior of each consumer, is governed by local optimization of energy consumption. The local optimization accounts for both cost of energy
and distribution losses, as well as any discomfort incurred by consumers from any shift in energy consumption. Our work will illustrate that in the simplest formulation of indirect control, the stability is greatly affected of both the behavior of consumers, and the number of consumers to include. We will show how instability is related to the local optimization problem of the
consumer, and the information made available to him.