By effectively adjusting the appliance usage patterns of customers, demand response (DR) is expected to bring significant economic and environmental benefits to the future smart grid. Two kinds of appliances should be considered for DR, i.e. shiftable appliances such as dishwashers and laundry machines, and non-shiftable appliances such as lights and stoves. Although the shiftable appliances can be well controlled by energy management systems, the random usage patterns of nonshiftable

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... will result in uncertainties to electrical demands and thus, affect the efficiency and reliability of smart grid operation. A two-stage stochastic programming problem is formulated, for which the distribution system operation cost is minimised in the first stage, by considering various distribution system operation constraints. The scheduling of shiftable appliances is optimised in the second stage, by considering the random usage patterns of non-shiftable appliances. To reduce the computational complexity caused by a large number of home appliances in distribution systems, scenario reduction technique is applied to reduce the number of possible scenarios while still retaining the essential features of the original scenario set. Extensive simulations are performed to evaluate the proposed DR scheme in IEEE 33-bus and 119-bus test distribution systems based on real appliance usage pattern data.