A Demand-responsive tariff algorithm for islanded microgrid electricity markets in Sri Lanka

Abstract

This paper introduces a dynamic tariff algorithm designed for islanded community microgrids in Sri Lanka, aiming to optimize energy distribution through real-time pricing and demand response integration. The algorithm accounts for solar generation, battery storage, and supply-demand mismatches to calculate a fair market price that reflects operational realities. By adjusting prices based on a demand factor, the system incentivizes consumers to shift or reduce consumption during peak periods, thereby enhancing grid stability and reducing dependency on diesel generators. The proposed model supports a more sustainable, responsive, and economically efficient energy market tailored for decentralized microgrid environments.