HOMER Knowledge Base
HOMER Grid Control (Dispatch) Strategies
Product: HOMER Grid
Grid charges can be categorized into energy charges, demand charges and fixed charges. Energy charge is the cost ($/kWh) of consumption. Demand charge is the cost ($/kW) of demand. Demand charges are the utility’s way of discouraging sudden spikes in demand. Peak shaving or demand charge reduction aims to reduce a customer's electricity bill by reducing these demand charges. To reduce demand charges, HOMER Grid will try to limit the peak power purchased during each month.
For systems that are subject to a demand charge, HOMER Grid tries to use batteries or your generator (if included in your model) to reduce the demand charge. At the start of each month, HOMER Grid picks a demand limit, or a maximum allowable power level in kilowatts (kW) to purchase from the grid at any moment. This limit is artificial and doesn’t have any relationship to hardware capacity – it is a “goal” power that the dispatch tries to meet.
If the demand limit we pick is too low, the system won’t be able to supply the load, and we should pick a higher demand limit. If the demand limit is too high, we didn’t make full use of our batteries – we could probably reduce demand charges further and save more money. HOMER Grid tries different demand limits until it finds one the minimizes operating costs for the month. Depending on your model, operating costs could include the grid bill, generator fuel and O&M, and battery bank wear.
Since some utility tariffs include time-of-use demand rates (that only apply during certain times of the day or days of the week), HOMER Grid can add a second demand limit that coincides with the time-of-use rates. For example, it might save money to reduce the peak demand even lower when a higher demand charge is in effect. In the figure below, we can see a simulation with the Southern California Edison’s TOU-GS-2 tariff. We have zoomed in on the beginning of June, where a summertime peak demand charge goes into effect during a few hours on weekdays. HOMER Grid’s peak shaving algorithm can extract extra value by driving the demand limit lower during the times of day when this demand charge applies.
When there are large differences between the off-peak and peak energy prices, arbitrage can be cost effective. In HOMER Grid, price arbitrage doesn’t necessarily mean selling to the grid. Serving the electric load from the battery bank to avoid energy purchases at a high price can provide more value than selling.
In the plots above, the difference between the peak and off-peak daily prices is about $0.12 per kWh. With a very cheap and durable lithium ion battery bank, we can save money by using the batteries instead of buying electricity at $0.17 per kWh. We can observe that the battery discharges during the peak daily price, and recharges at night when electricity is only $0.05 per kWh.
The control algorithm balances between peak shaving and arbitrage here. The demand limit is set a bit higher to allow more power for recharging the batteries completely overnight. Even in cases where outright arbitrage isn’t cost effective, the dispatch will wait until energy is cheap to charge if it can. In the plots below, the dispatch shaves the load peak slightly, and then leaves the battery empty until the energy price falls to the off-peak rate before charging. Charging begins where the grid purchases (black) exceed the load (blue).
The dispatch algorithm in HOMER Grid knows the future load and solar production – we say it has “48-hour look-ahead”. This approximates modern systems that uses forecasting to improve performance. In the plot below, we can see that the generator turns on twice to avoid a capacity shortage. This is an extreme example designed to illustrate the function clearly: the generator is very small, and the system can’t buy any energy from the grid. Although this example is not very realistic, the algorithm works the same in all cases to make sure that the load is supplied and the demand limit is respected whenever possible.
On January 1, the generator turns on when the battery can no longer supply the load, and it stays on until January 2 when the solar array production recharges the battery. The generator turns on again on January 4, but this time the battery still has plenty of energy to supply the load -- about 55% SOC. We see that even with the generator running at full load, the battery is nearly depleted on the evening of Jan 5. The algorithm looked ahead, and saw this, and turned on the generator in advance. If it waited any longer to turn on the generator, there would have been a capacity shortage on Jan 5.
The peak shaving control algorithm will allow the battery to discharge in anticipation of times when the PV output is greater than the load. By doing this, the system can maximize self-consumption instead of selling the excess energy. In the time series plot below, the dispatch buys as little as it can from the grid on March 1 and March 2, leaving the battery very close to the minimum SOC on the morning of March 3. The large PV array fully charges the battery bank on March 3, and excess electricity is sold back to the utility in the afternoon. The system doesn’t buy any electricity overnight on March 3 to allow the battery to deplete as much as possible in anticipation of the surplus on March 4.
Depending on the components you have added to your model HOMER Grid will use a combination of the CHP generator, utility connection, electric heater, battery, and boiler to supply both the electric and thermal loads in the lowest-cost way possible.
The plots below show the operation of a CHP system with an electric heater (called Thermal Load Controller in the legend). The CHP generator is the cheapest source, and so it runs at nearly full load. Some of its electrical production is burned for heat in the electric heater. The remainder of the load is supplied by the utility. The thermal load is served by a combination of the CHP thermal output and the electric heater. The electric load and electric heater are served by the combination of CHP generator electric production and utility purchases.
If the system includes batteries, they will also be considered when the dispatch decides how supply the electric load and the electric heater. The system above does include a boiler since it is required by HOMER Grid for systems with a thermal load, but the boiler fuel’s price was set high to discourage the system from using it. If the system did not include an electric heater, then it would not be able to convert electricity to heat, and it would be up to the CHP generator and boiler to supply the thermal load.
Grid charges can be categorized into energy charges, demand charges and fixed charges. Energy charge is the cost ($/kWh) of consumption. Demand charge is the cost ($/kW) of demand. Demand charges are the utility’s way of discouraging sudden spikes in demand. Peak shaving or demand charge reduction aims to reduce a customer's electricity bill by reducing these demand charges. To reduce demand charges, HOMER Grid will try to limit the peak power purchased during each month.
Peak Shaving
For systems that are subject to a demand charge, HOMER Grid tries to use batteries or your generator (if included in your model) to reduce the demand charge. At the start of each month, HOMER Grid picks a demand limit, or a maximum allowable power level in kilowatts (kW) to purchase from the grid at any moment. This limit is artificial and doesn’t have any relationship to hardware capacity – it is a “goal” power that the dispatch tries to meet.
If the demand limit we pick is too low, the system won’t be able to supply the load, and we should pick a higher demand limit. If the demand limit is too high, we didn’t make full use of our batteries – we could probably reduce demand charges further and save more money. HOMER Grid tries different demand limits until it finds one the minimizes operating costs for the month. Depending on your model, operating costs could include the grid bill, generator fuel and O&M, and battery bank wear.
Since some utility tariffs include time-of-use demand rates (that only apply during certain times of the day or days of the week), HOMER Grid can add a second demand limit that coincides with the time-of-use rates. For example, it might save money to reduce the peak demand even lower when a higher demand charge is in effect. In the figure below, we can see a simulation with the Southern California Edison’s TOU-GS-2 tariff. We have zoomed in on the beginning of June, where a summertime peak demand charge goes into effect during a few hours on weekdays. HOMER Grid’s peak shaving algorithm can extract extra value by driving the demand limit lower during the times of day when this demand charge applies.
Arbitrage
When there are large differences between the off-peak and peak energy prices, arbitrage can be cost effective. In HOMER Grid, price arbitrage doesn’t necessarily mean selling to the grid. Serving the electric load from the battery bank to avoid energy purchases at a high price can provide more value than selling.
In the plots above, the difference between the peak and off-peak daily prices is about $0.12 per kWh. With a very cheap and durable lithium ion battery bank, we can save money by using the batteries instead of buying electricity at $0.17 per kWh. We can observe that the battery discharges during the peak daily price, and recharges at night when electricity is only $0.05 per kWh.
The control algorithm balances between peak shaving and arbitrage here. The demand limit is set a bit higher to allow more power for recharging the batteries completely overnight. Even in cases where outright arbitrage isn’t cost effective, the dispatch will wait until energy is cheap to charge if it can. In the plots below, the dispatch shaves the load peak slightly, and then leaves the battery empty until the energy price falls to the off-peak rate before charging. Charging begins where the grid purchases (black) exceed the load (blue).
Capacity Shortage Avoidance
The dispatch algorithm in HOMER Grid knows the future load and solar production – we say it has “48-hour look-ahead”. This approximates modern systems that uses forecasting to improve performance. In the plot below, we can see that the generator turns on twice to avoid a capacity shortage. This is an extreme example designed to illustrate the function clearly: the generator is very small, and the system can’t buy any energy from the grid. Although this example is not very realistic, the algorithm works the same in all cases to make sure that the load is supplied and the demand limit is respected whenever possible.
On January 1, the generator turns on when the battery can no longer supply the load, and it stays on until January 2 when the solar array production recharges the battery. The generator turns on again on January 4, but this time the battery still has plenty of energy to supply the load -- about 55% SOC. We see that even with the generator running at full load, the battery is nearly depleted on the evening of Jan 5. The algorithm looked ahead, and saw this, and turned on the generator in advance. If it waited any longer to turn on the generator, there would have been a capacity shortage on Jan 5.
Maximize Self-Consumption
The peak shaving control algorithm will allow the battery to discharge in anticipation of times when the PV output is greater than the load. By doing this, the system can maximize self-consumption instead of selling the excess energy. In the time series plot below, the dispatch buys as little as it can from the grid on March 1 and March 2, leaving the battery very close to the minimum SOC on the morning of March 3. The large PV array fully charges the battery bank on March 3, and excess electricity is sold back to the utility in the afternoon. The system doesn’t buy any electricity overnight on March 3 to allow the battery to deplete as much as possible in anticipation of the surplus on March 4.
Combined Heat and Power Economics
Depending on the components you have added to your model HOMER Grid will use a combination of the CHP generator, utility connection, electric heater, battery, and boiler to supply both the electric and thermal loads in the lowest-cost way possible.
The plots below show the operation of a CHP system with an electric heater (called Thermal Load Controller in the legend). The CHP generator is the cheapest source, and so it runs at nearly full load. Some of its electrical production is burned for heat in the electric heater. The remainder of the load is supplied by the utility. The thermal load is served by a combination of the CHP thermal output and the electric heater. The electric load and electric heater are served by the combination of CHP generator electric production and utility purchases.
If the system includes batteries, they will also be considered when the dispatch decides how supply the electric load and the electric heater. The system above does include a boiler since it is required by HOMER Grid for systems with a thermal load, but the boiler fuel’s price was set high to discourage the system from using it. If the system did not include an electric heater, then it would not be able to convert electricity to heat, and it would be up to the CHP generator and boiler to supply the thermal load.