The Impact of Consumer Preference Distributions on Dynamic Electricity Pricing for Residential Demand Response

Abstract

Demand Response (DR) is the adjustment of consumer electricity demand through the deployment of one or more strategies, e.g. direct load control, policy implementation, dynamic pricing, or other economic incentives. Widespread implementation of DR is a promising solution for addressing energy challenges such as the integration of intermittent renewable energy resources, reducing capacity cost, and improving grid reliability. Understanding residential consumer preferences for shifting product usage and how these preferences are distributed amongst a population are key to predicting the effectiveness of different DR strategies. In addition, there is a need for a better understanding of how different DR programs, system level objectives, and preference distributions will impact different segments of consumers within a population. Specifically, the impacts on their product use behavior and electricity bill. To address this challenge, a product based approach to modeling consumer decisions about altering their electricity consumption is proposed, which links consumer value to their products, instead of directly to the amount of electricity they consume. This model is then used to demonstrate how population level preference distributions for altering product use impact system level objectives.