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Home Energy Management System

Technical Report · May 2014

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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 Demand Reduction (PPDR) technology enables cloud-based
owners. One is for air conditioning and the other is for electric control of distributed energy storage devices for reducing peak-
water heaters. There is a separate meter for each rate. If there power demand. PPDR technology has been tested in an office
is an energy supply emergency then DTE can turn off the air environment. The PPDR was allowed to control the
conditioning and water heater loads to relieve the system [5]. charging/discharging of existing personal computer (PC)
Schneider Electric’s “Wiser Home Management System” batteries. This test showed PPDR reduced approximately10%
contains the following components: mobile app and web of peak power demand from plugged loads [1] [8].
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].
Figure-2: Peak Power Demand Reduction utilizing
distributed batteries
III. FUTURE TECHNOLOGY
The foundation for future technology is a communications DR technology works by compensating consumers to
systems consisting of home servers and a system complex curtail their load when a utility is a generation capacity.
servers used by the utility [7]. This will allow consumers to Development of a demand response automation server (DRAS)
optimize both the use of renewable energy and their total prototype is underway. This system is compliant with the
demand. The servers will collect data from the HEMS and international DR standard: Open ADR 2.0a. DRAS is enables
environmental sensors. Energy costs can then be managed by a utilities and customers to automatically send and receive
hybrid use of renewable and fossil fuel energy. As the use of control information (DR signals). For example, a utility could
smart grid increases, different servers and types of EMS will be send a command to the DRAS for load curtailment. The DRAS
interconnected. As they are able to work together power would then communicate with several HEMS to determine
systems operations will further be optimized. This type of which in-home appliances is DR compliant. Load will be
interconnection can be considered a smart network. curtailed automatically, by turning off appliances according to
Various network solutions have been introduced to pre-defined settings made by each customer.
facilitate the use of smart networks on the distribution system. Integration of HEMS with DR is becoming popular
Prominent solutions include: WPAN and the WisReed. worldwide. In the US, Toshiba has completed a full scale test
WPAN works by allowing the complex server to collect usage operation of a smart grid in New Mexico [9]. The project
and appliance status data. Then the complex server advanced the development of HEMS to optimize DR signals,
communicates with the home server, which controls the in- predicting PV generation output, and forecasting home power
home appliances; adjusting their use to optimize costs. Wisreed demand. Toshiba is also working on the largest project in Japan
is used for the automatic construction of a network without any that involves integration of Building Energy Management
settings. It can self-restore a network through auto-reroute System and HEMS with utility’s EMS and DR. The project
features; adapting to the changing environmental conditions covers three (3) large areas in Yokohama with more than
[1]. 420,000 people in 170,000 households [10].
Products such as smart sensing platform (SSPF) help
establish networks in home or business EMS. SSPF is intended IV. HEMS BENEFITS TO THE POWER SYSTEM
to simplify the complex communication standards that have HEMS offer a wide horizon of automation in the residential
been independently defined by different industry areas [1]. It electric system that will reduce electric energy consumption.
improves system efficiency by targeting power saving Consequently, this will lower costs for the utility and the
appliances such as solar panels, EV chargers and fuel cells are consumer. Residential customers with HEMS results in a
in a network, and simplifying their network controls. reduction of the base load and peak demand. The term “base
Cloud-EMS stores collected demand-data in reliable cloud load” refers to the minimum amount of power that the electric
platform so it can be centrally managed. This allows an EMS utility must make available to its customer [11].The term “peak
to provide a daily demand forecast for the consumer. This is demand” refers to the highest amount of electricity being
not limited to reducing costs for home owners. Businesses consumed at any one point in time across a utility’s networked
could use this to consider precautionary measures such as system [11].With the reduction of electricity demand, the
relying on energy storage devices or generating power power utility will have a better opportunity to select the least
internally for times of peak power consumption. Peak Power expensive generators to use during the day-to-day operation –
reducing the cost of electricity. In the long run this reduction of reduces the GENCO’s profit and can potentially ruin fixed
demand will decrease the need for expansion of existing pricing methods.
equipment or building additional generating plants and Dynamic pricing methods, such as real-time pricing (RTP),
transmission lines. can have severe effects on system pricing and stability. As
The cost of electricity is not exclusively due to the costs of consumers (via HEMS) participate in a RTP whole-sale market
generation or system expansion. Transmission lines have a closed-loop feedback system is created in the power system
loadability limits and can become congested [2].A regional [16]. The use of RTP in conjunction with HEMS may cause
transmission operator (RTO) – like MISO --is responsible for prices to oscillate or become volatile [14].
managing this congestion. This means that a scenario will exist One RTP market type forces the GENCO to calculate its
when the cheapest transmission line between a GENCO and a marginal operational costs (λ) for the next time interval so that
consumer is not available. It should be noted that this part of it can meet the forecast the demand. The GENCO is assuming
the power market is complicated, but an RTO, under various the risk of price uncertainty in this market type. If the actual
conditions, can impose additional costs on electricity [12].This consumer demand is greater than the forecast demand, the
is why HEMS use with DR is so important. The GENCO or GENCO will lose money. It should be noted that an RTO may
RTO will have the ability to help shape the demand profile, have to reimburse the GENCO, based on a prior agreement.
reducing transmission line congestion, and again reducing costs For simplicity, further RTO activity will be excluded.
for the consumer [2]. The second market type allows the GENCO to calculate λ
Another benefit the reduction of electric energy after the market has cleared. In other words, the GENCO may
consumption provides is the diminution of greenhouse gas calculate λ using the actual demand for that time interval. In
emission (GHG). The majority of GHG emissions released by this RTP market type the consumer is forced to predict λ and
utilities are by the fuel being used to run the generating units -- will assume the risk of price uncertainty. The consumer
specifically, coal-fired power plants [13].HEMS will help with schedules their demand using their predicted λ, and if the actual
the reduction of GHG in three ways. The first it will directly λ is higher than predicted, the consumer will pay more.
reduce the overall demand. In other words, the use of coal-fired This report will only examine the first market type
plant will be reduced. The HEMS will reduce peak demand. described, for brevity. Examining the similarities between each
This decreases the probability of fossil fueled “peaker” plants market type will reveal that both have the same, inherent
being called upon to operate -- Peaker plants are significant problem. In either market type, one market participant is forced
producers of GHG emissions [13]. The final way HEMS will to forecast the market, while the other participant is allowed to
help in the reduction of GHG emissions is through the respond to the market in real time. This asymmetrical market is
integration of local, renewable energy – which will off-set the what creates the closed-loop feedback.
higher costs associated with using (relatively) expensive This asymmetry in the market is not a problem by itself.
remote generation. The behavior of each market participant must be examined.
Each participant’s behavior can be predicted: they seek to
V. THE NEGATIVE IMPACTS AND COMPLICATIONS OF HEMS maximize their own value within the whole-sale market. The
TO THE POWER SYSTEM
behavior of the Consumer and the GENCO may be modeled as
The Large-scale installation of HEMS on a power system two separate objective functions:
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 dk: The net value for actual consumer consumption at time k
in severe cases system instability [14]. The problems created v (x): the dollar value for consuming (x) kW-hr at time k
by an HEMS installation are specific to the type of pricing λk : The marginal cost in $/kW-hr
method used by GENCO. xk: the amount of kW-hr consumed at time k
Time of use (TOU) and critical peak pricing (CPP) are two
typical market price models used by GENCOs to reduce on- Equation 1: The consumer’s objective function [16]
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 sk: the GENCO’s net value for the kW-hr produced at time k
are fixed ahead of the market. When the consumer begins using ci(x): The Cost-function of the GENCO, evaluated for the
HEMS, they are optimizing their costs. A straightforward production of (x) kW-hr
approach for a consumer to minimize their cost is by shifting
demand to off-peak energy prices. If all connected consumers Equation 2 The GENCO’s objective function[16]
adopt this strategy, a second demand peak will be created
during off-peak hours. This peak is referred to as a “rebound As stated previously, in this RPT market, only the
peak.” A rebound peak occurs during low TOU (or CPP) consumer knows the value of dk at time interval k. The
pricing periods and can often be greater than the demand peak GENCO calculates the value of λk assuming dk is equal to dk-
for the same system without HEMS [15]. The rebound peak 1. After time interval k, clears, the GENCO receives the value
of dk which it will use to calculate (and announce) λk+1. With
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Algorithm for Intelligent Home Energy Management and

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