Demand Bidding Program and Its Application in Hotel Energy Management

Demand bidding program (DBP) is recently adopted in practice by some energy operators. DBP is a risk-free demand response program targeting large energy consumers. In this paper, we consider DBP with the application in hotel energy management. For DBP, optimization problem is formulated with the objective of maximizing expected reward, which is received when the the amount of energy saving satisfies the contract. For a general distribution of energy consumption, we give a general condition for the optimal bid and outline an algorithm to find the solution without numerical integration. Furthermore, for Gaussian distribution, we derive closed-form expressions of the optimal bid and the corresponding expected reward. Regarding hotel energy, we characterize loads in the hotel and introduce several energy consumption models that capture major energy use. With the proposed models and DBP, simulation results show that DBP provides economics benefits to the hotel and encourages load scheduling. Furthermore, when only mean and variance of energy consumption are known, the validity of Gaussian approximation for computing optimal load and expected reward is also discussed.