  Recent communication, computation, and technology advances coupled with
climate change concerns have transformed the near future prospects of
electricity transmission, and, more notably, distribution systems and
microgrids. Distributed resources (wind and solar generation, combined heat and
power) and flexible loads (storage, computing, EV, HVAC) make it imperative to
increase investment and improve operational efficiency. Commercial and
residential buildings, being the largest energy consumption group among
flexible loads in microgrids, have the largest potential and flexibility to
provide demand side management. Recent advances in networked systems and the
anticipated breakthroughs of the Internet of Things will enable significant
advances in demand response capabilities of intelligent load network of
power-consuming devices such as HVAC components, water heaters, and buildings.
In this paper, a new operating framework, called packetized direct load control
(PDLC), is proposed based on the notion of quantization of energy demand. This
control protocol is built on top of two communication protocols that carry
either complete or binary information regarding the operation status of the
appliances. We discuss the optimal demand side operation for both protocols and
analytically derive the performance differences between the protocols. We
propose an optimal reservation strategy for traditional and renewable energy
for the PDLC in both day-ahead and real time markets. In the end we discuss the
fundamental trade-off between achieving controllability and endowing
flexibility.
