Co-Optimizing Distributed Energy Resources under Demand Charges and Bi-Directional Power Flow

We address the co-optimization of behind-the-meter distributed energy resources (BTM DER), including flexible demands, renewable distributed generation (DG), and battery energy storage systems (BESS) under net energy metering (NEM) frameworks with demand charges. We formulate the problem as a stochastic dynamic program that accounts for renewable generation uncertainty and operational surplus maximization. Our theoretical analysis reveals that the optimal policy follows a threshold structure, though the conditional cases grow exponentially with the number of flexible demands. Finally, we show that even a simple algorithm leveraging this threshold structure performs well in simulation, emphasizing its importance in developing near-optimal algorithms. These findings provide crucial insights for implementing prosumer energy management systems under complex tariff structures.