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Balancing Forecast Accuracy and Switching Costs in Online Optimization of Energy Management Systems
Evgenii Genov, Julian Ruddick, Christoph Bergmeir, Majid Vafaeipour, Thierry Coosemans, Salvador Garcia, Maarten Messagie
This study investigates the integration of forecasting and optimization in energy management systems, with a focus on the role of switching costs -- penalties incurred from frequent operational adjustments. We develop a theoretical and empirical framework to examine how forecast accuracy and stability interact with switching costs in online decision-making settings. Our analysis spans both deterministic and stochastic optimization approaches, using point and probabilistic forecasts. A novel metric for measuring temporal consistency in probabilistic forecasts is introduced, and the framework is validated in a real-world battery scheduling case based on the CityLearn 2022 challenge. Results show that switching costs significantly alter the trade-off between forecast accuracy and stability, and that more stable forecasts can reduce the performance loss due to switching. Contrary to common practice, the findings suggest that, under non-negligible switching costs, longer commitment periods may lead to better overall outcomes. These insights have practical implications for the design of intelligent, forecast-aware energy management systems.
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