The Optimal Mechanism Design of Retail Prices in the Electricity Market for Several Types of Consumers

Abstract

In this paper, we discuss the demand side management (DSM) problem: how to incentivize a consumer to equalize the load during the day through price-dependent demand. Traditionally, the retail market offers several electricity payment schemes. A scheme is effective when the different tariffs satisfy different consumers. At the same time, the existing and generally accepted retail pricing schemes can lead to an "adverse selection" problem when all consumers choose the same price, thereby, reducing the possible general welfare. We propose an optimal design of pricing mechanisms, taking into account the interests of the electricity supplier and different types of consumers. The results of our work are that the optimal mechanism is implemented simultaneously for several periods, including the case when the ratio of types of consumers in periods changes. In addition, the mechanism proposed by us, in contrast to the studies of other researchers, provides an equilibrium close to the socially optimal maximum. We describe the implementation algorithm of the mechanism and provide examples of its action in the electric power system with different types and numbers of consumers.

Digitalization Processes in Distribution Grids: A Comprehensive Review of Strategies and Challenges

“…The research in [133] explores these effects, whereas Ref. [210] examines the optimal pricing designs for varying consumer demographics, emphasizing customized strategies to boost engagement and efficient energy use. The role of digital technologies like smart meters and comparison tools in promoting consumer interaction with time-based tariffs and DR is discussed in [36], enhancing pricing transparency and consumer understanding.…”

Research on Supplier Evaluation Method Based on Improved Fuzzy Evaluation Model

“…At present, more research work has been done around supplier evaluation at home and abroad, including not only the construction of evaluation index system, but also the innovation of evaluation methods, which mainly involves multivariate discriminant analysis (MDA), fuzzy comprehensive evaluation method, gray clustering trigonometry, neural network, and support vector machine, etc [5][6][7][8][9]. Literature [5] conducted a credit scoring study on Tanzanian commercial banks using MDA, but the assumptions of its independent variables are difficult to fulfill in practice.…”

“…Literature [7] used MDA to assess the risk of bank credit, but the independent variables of multivariate discriminant analysis have strict assumptions on the premise, and its generalization ability in reality is poor. Literature [8] proposes a smart grid construction evaluation method based on principal component clustering to analyze the value of principal component analysis and factor loading matrix clustering analysis, and adopts a horizontal comparison strategy to reduce the complexity of the problem, and verifies the effectiveness of the method. Literature [9] constructs SDN evaluation index system under the new electricity market pattern, and proposes a comprehensive evaluation model based on collaborative group decision-making, adopting a combination of weighted average operator to agglomerate individual preferences, and realizing the coherence between the interests of the participating individuals and the group through the dynamic adjustment of the information interaction and the weight of the opinions, and the method has a certain degree of dependence on the decision-making subject type and distribution.…”