Optimal electricity rate structures for peak demand reduction using economic model predictive control

Wesley J. Cole*, David P. Morton, Thomas F. Edgar

*Corresponding author for this work

Research output: Contribution to journalArticlepeer-review

26 Scopus citations


Economic model predictive control (EMPC) has recently gained popularity for managing energy consumption in buildings that are exposed to non-constant electricity prices, such as time-of-use prices or real-time prices. These electricity prices are employed directly in the objective function of the EMPC problem. This paper considers how electricity prices can be designed in order to achieve a specific objective, which in this case is minimizing peak electricity demand. A primal-dual formulation of the EMPC problem is presented that is used to determine optimal prices that minimize peak demand. The method is demonstrated on a simulated community of 900 residential homes to create a pricing structure that minimizes the peak demand of the community of homes. The pricing structure shows that homes should be given a 1-h peak demand duration, and that the peak prices given to the homes should be spread unevenly across 6 h of the afternoon.

Original languageEnglish (US)
Pages (from-to)1311-1317
Number of pages7
JournalJournal of Process Control
Issue number8
StatePublished - Jan 1 2014


  • Critical peak pricing
  • Demand response
  • Duality
  • Economic model predictive control
  • Inverse optimization
  • Peak demand
  • Residential air conditioning

ASJC Scopus subject areas

  • Control and Systems Engineering
  • Modeling and Simulation
  • Computer Science Applications
  • Industrial and Manufacturing Engineering

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