Dynamic Pricing and Stabilization of Supply and Demand in Modern Electric Power Grids

Abstract

The paper proposes a mechanism for real-time retail pricing of electricity in smart power grids, with price stability as the primary concern. In previous articles, the authors argued that relaying the real-time wholesale market prices to the end consumers creates a closed loop feedback system which could be unstable or lack robustness, leading to extreme price volatility. In this paper, a mathematical model is developed for characterization of the dynamic evolution of supply, (elastic) demand, and market clearing (locational marginal) prices under real-time pricing. It is assumed that the real-time prices for retail consumers are derived from the Locational Marginal Prices (LMPs) of the wholesale balancing markets. The main contribution of the paper is in presenting a stabilizing pricing algorithm and characterization of its effects on system efficiency. Numerical simulations conform with our analysis and show the stabilizing effect of the mechanism and its robustness to disturbances.

Generation bidding game with potentially false attestation of flexible demand

“…As in [6], supposing that each generator g ∈ G sets its own price p g $ per kWh (or other energy commodity units). We model aggregate load to be linear in response to clearing price, P b…”

“…We neither assume that each generator's cost of production is known to the ISO (i.e., the a g terms), nor, equivalently, that the ISO chooses its allocations to the generators based on this (as in [6]). Besides, the cost function (hence the payoff function) of any generator is opaque to all its competitors, concerning this, our game can be regarded as an incomplete information game.…”

“…Recently, problems associated with variations of the optimum power-flow (OPF) problem [4,5] have been considered by several authors for price-elastic demand, e.g., [6,7]. Indeed, demand elasticity for electricity is motivated by the onset of potentially enormous load from flexible appliances, particularly plugin electric and hybrid-electric vehicles, see, e.g., [8,9] and the references therein, where an electric vehicle represents electricity demand comparable to the rest of the household combined.…”

A Generic Framework for the Evaluation of the Benefits Expected from the Smart Grid

“…The significant peak load reduction expected from smart grid operation will allow the DSOs to reduce their costs and eventually the prices enjoyed by the consumers; (ii) Economic: In addition to potential bill savings for all consumers, corporate users may enjoy significant indirect economic benefits as havoc situations that lead to severe losses of productivity will be prevented; (iii) Environmental/social: Going green will be facilitated as the Smart Grid will enable the consumers to migrate to a more dynamic consumption pattern, thus indirectly leading to reduced energy consumption coming from fossil fuels. Being an essential component of the Smart Grid, smart metering will give the end-users the opportunity to control-practically in real time-the amount of energy they consume and how much they spend every month on their energy bills [13,14]. Demand-side management will enable consumers to adapt their energy consumption and, consequently, the level of the generated power.…”

Multi-Period Regional Energy Management Based on Dynamic Pricing with Non-Deficit Real-Time Market Trading

“…As the need for efficient use of energy increases, this price decision method is expected to become a key solution for constructing a sustainable society. In particular, because power consumers and power generators will participate in energy trading as selfish market players in future "smart grid" power networks, dynamic pricing is quite useful for distributed power supply and demand management to maintain stable operation of power grids [1], [2]. Further, the dynamic pricing is also highly expected because of its economic property.…”