Targeting customers for an optimized energy procurement

Abstract

This research paper investigates consumer-specific costs on power spot markets. We use real-world smart meter data and market prices to analyze an energy procurement strategy based on the newsvendor model. The outcome displays a segmentation into an ordinal array of different costs-per-customer, which allow for a sensitivity analysis to examine appropriate measures and policy implications. We find the most relevant customer class to be the costliest one percent. These prime targets' share of total costs is 1.5 times as high as the respective share of total consumption. Reallocating the targets into incentive based contracts may allow for a significant reduction of utilities' costs while remaining on a relatively steady service provision level.