A real-time, personalized consumption-based pricing scheme for the consumptions of traditional and renewable energies

Abstract

A real-time, personalized consumption-based pricing scheme can induce electricity users to change their purchase behaviors, thus becoming an important issue in exploring the management mechanisms of electricity markets. To stabilize electricity prices, increase operators' revenues, and balance market demands, we consider the pricing scheme in a smart grid market where traditional and renewable energies are available for sales. Under the scheme, we develop a leader-follower game to characterize the strategic interactions between a demand side management center and residential users, and show that there exists a unique Stackelberg equilibrium. Our numerical analysis indicates that the real-time pricing scheme makes the electricity price difference between valley and peak times within 0.4 cents, thereby achieving the goal of mitigating peak loads and stabilizing electricity prices. We reveal that the renewable energy loads dominate traditional energy loads even when the price of renewable energy is higher than that of traditional energy. We also perform sensitivity analysis and find that an increase in a user's dissatisfaction with the electricity supply can raise electricity price for the user and two different electricity loads. Moreover, the demand side management center's revenue changes with a concave appearance.