Optimal Behavior of Smart Households Facing with both Price-based and Incentive-based Demand Response Programs M. Shafie-khah 1 , S. Javadi 1 , P. Siano 2 , J.P.S. Catalão 1,3,4 1 C-MAST, University of Beira Interior, Covilhã, Portugal, 2 University of Salerno, Fisciano (SA), 84084 Salerno, Italy, 3 INESC TEC and FEUP, Porto 4200-465, Portugal, 4 INESC-ID, IST, Univ. Lisbon, Lisbon 1049-001, Portugal miadreza@ubi.pt; ss.ja85@yahoo.com; psiano@unisa.it; catalao@fe.up.pt Abstract—Because of various developments in communications and technologies, each residential consumer has been enabled to contribute in Demand Response Programs (DRPs), manage its electrical usage and reduce its cost by using a Household Energy Management (HEM) system. An operational HEM model is investigated to find the minimum consumer’s cost in every DRP and to guarantee the end-user’s satisfaction, as well as to ensure the practical constraints of every battery and residential appliance. The numerical studies show that the presented method considerably affects the operational patterns of the HEM system in each DRP. According to the obtained results, by employing the presented method the consumer’s cost is decreased up to 40%. Index Terms—Battery, demand response, household energy management, incentive, tariff. NOMENCLATURE A. Superscripts Acc Acceptable time or operation mode by the end-user. App Electrical residential appliance. B Battery. B2G Battery to the grid. B2H Battery to home. ch Charging mode. Cntrl Control/manageable appliances or a part of demand. Crit Critical appliances or a part of demand. Degr Battery degradation because of V2G mode. dis Discharging mode. ini Initial value of price or demand. G Grid. G2H Grid to home. H Home. H2G Home to the grid. H2B Home to the battery. Nom Nominated amount of residential appliance’s electrical usage. B. Indexes i Control/manageable residential appliances. t Times. C. Operator ∆ Change in variable amounts. D. Parameters and Variables B Consumer’s benefit. Cap Battery capacity. CostB Capital expenditure of battery. Cd Cost of battery degradation. d Electrical load. Inc Incentive rate arisen from decreasing the load. LET Battery’s lifetime. P Active power. Pen Penalty rate arisen from not decreasing the load. r Charge/discharge rates of battery. Rev Consumer’s revenue. SOC State of the Charge of battery. s On/off state indicator of control/manageable residential appliances. v Inelasticity parameter of residential appliances. V Consumer’s dissatisfaction compared to the fixed-rate load. WP Working period of controllable residential appliances. η Efficiency. π Scenarios’ probability. λ Electricity tariff. ς Incentive. ξ Penalty. χ,γ Binary variables for bi-directional power.