The advantages of capacitor bank placement and demand response program execution on the optimal operation of isolated microgrids

•Capacitor placement problem in a radial distribution system.•Demand response program execution.•Compensating reactive power and minimizing real power losses and the total voltage deviation.•Optimal operation of isolated microgrids (MGs).•Harmony search algorithm (HSA). Reactive power compensation is one of the important problems during the operation of power systems. By the way, capacitor allocation is one of the efficient and affordable tools in order to reactive power compensation of power systems, which is used frequently in conversional networks. This paper presents an efficient approach for optimal placement and sizing of shunt capacitors in islanded microgrids to improve the voltage profile and mitigate the power loss considering demand response based on harmony search algorithm (HSA). To validate the efficiency of the proposed approach, a 69-node islanded microgrid is being studied. Also, the obtained results from HSA are compared with the particle swarm optimization (PSO) algorithm. The results of the proposed approach show the efficiency of optimal capacitor allocation in the islanded microgrid, which can be considered as an effective idea in reactive power compensation.