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Customers play a key role in running Demand Response Programs (DRPs). Incentive-based DRP is defined as changes in costumers’ consumption level in response to incentive programs outlined by systems to reduce the daily load demand peaks. Optimal operation of microgrids is one of the most important challenges of power system operators. Decreasing the cost of generation and operation while the constraints are met is one of the main objectives of this problem. In this article, the impact of customers’ participation level in Emergency Demand Response Program (EDRP) and the effect of illogical incentive values in implementing EDRP on the microgrid operation are represented. Moreover, the effect of applying an incentive-based EDRP, on loads and power system operation cost in presence of various uncertainties has been studied in detail. To model the uncertainties in microgrid operation such as generation unit failure, random outages of transmission lines and upstream line, load forecasting error, power generation uncertainty of renewable energies based distributed generation units, and the possibility of no response of customers to scheduled interruptions, several scenarios are considered. EDRP is modeled based on price elasticity and customer benefit function. To verify the efficiency of the proposed model, it is applied to 11-Bus microgrid in a 24-h scheduling period. Simulation results illustrate the effects of different level of customer’s participation on costumer’s benefit and total operation costs as well as determining an efficient use of energy resources in microgrid operation. It is also observed that unreasonable increase or decrease of incentives leads to increase of total cost. This gives an overview to microgrid operator to select the optimum incentive value based on the situation. [ABSTRACT FROM AUTHOR]

• The TOU-DRP is implemented in MG operation based on the price elasticity of demand and customer benefit. • Utilizing battery in running TOU-DRP for MG operation is studied. • Customers' participation level effect is investigated on operation cost, unserved energy, and wind power spillage. • Minimizing the operation cost as a result of implementing TOU-DRP is achieved. Penetration of wind units in Microgrid (MG) imposes remarkable challenges on MG operation. Demand Response Programs (DRPs) and Energy Storage Units are used by MG operators to address these challenges. This paper analyzes the effect of running the Time-of-Use Demand Response Program (TOU-DRP) on an isolated MG by considering different capacities of installed wind power with/without energy storage unit. The energy storage unit is deployed to cover the stochastic nature of wind generation unit. TOU-DRP is modeled based on price elasticity and customer benefit function in an isolated MG. Different levels of customers' participation in TOU-DRP has also been studied and its effects on operation cost, unserved energy, and wind power spillage are investigated comprehensively. To verify the proposed model's efficiency, the study is implemented on an 11-bus MG over a 24-h period for twelve detailed case studies. The case study results confirmed the effectiveness of the proposed model in running DRP and providing MG operator a general overview for optimal operation. [ABSTRACT FROM AUTHOR]