We describe the background and an analytical framework for a mathematical optimization model for home energy management systems (HEMS) to manage electricity demand on the smart grid by efficiently shifting electricity loads of households from peak times to off-peak times. We illustrate the flexibility of the model by modularizing various available technologies such as plug-in electric vehicles, battery storage, and automatic windows. First, the analysis shows that the end-user can accrue economic benefits by shifting consumer loads away from higher-priced periods. Specifically, we assessed the most likely sources of value to be derived from demand response technologies. Therefore, wide adoption of such modeling could create significant cost savings for consumers. Second, the findings are promising for the further development of more intelligent HEMS in the residential sector. Third, we formulated a smart grid valuation framework that is helpful for interpreting the model's results concerning the efficiency of current smart appliances and their respective prices. Finally, we explain the model's benefits, the major concerns when the model is applied in the real world, and the possible future areas that can be explored.
