Efficient Buyer Groups With Prediction-of-Use Electricity Tariffs

Valentin Robu, Meritxell Vinyals, Alex Rogers () and Nicholas Jennings
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Valentin Robu: HWU - Heriot-Watt University [Edinburgh]
Meritxell Vinyals: LADIS (CEA, LIST) - Laboratoire d'analyse des données et d'intelligence des systèmes (CEA, LIST) - DM2I (CEA, LIST) - Département Métrologie Instrumentation & Information (CEA, LIST) - LIST (CEA) - Laboratoire d'Intégration des Systèmes et des Technologies - DRT (CEA) - Direction de Recherche Technologique (CEA) - CEA - Commissariat à l'énergie atomique et aux énergies alternatives - Université Paris-Saclay
Alex Rogers: University of Southampton
Nicholas Jennings: Imperial College London

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Abstract: Current electricity tariffs do not reflect the real costs that a customer incurs to a supplier, as units are charged at the same rate, regardless of the consumption pattern. In this paper, we propose a prediction-of-use (POU) tariff that better reflects the predictability cost of a customer. Our tariff asks customers to pre-commit to a baseline consumption, and charges them based on both their actual consumption and the deviation from the anticipated baseline. First, we study, from a cooperative game theory perspective, the cost game induced by a single such tariff, and show customers would have an incentive to minimize their risk, by joining together when buying electricity as a grand coalition. Second, we study the efficient (i.e., cost-minimizing) structure of buying groups for the more realistic setting when multiple, competing POU tariffs are available. We propose a polynomial time algorithm to compute the efficient buyer groups, and validate our approach experimentally, using a large-scale data set of domestic consumers in the U.K.

Keywords: Games; Pricing; Game theory; Switches; Smart grids; Forward contracts; Heuristic algorithms; Electricity tariffs; cooperative game theory; coalition formation; collective switching; demand forecasting (search for similar items in EconPapers)
Date: 2018-09
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Citations: View citations in EconPapers (7)

Published in IEEE Transactions on Smart Grid, 2018, 9 (5), pp.4468 - 4479 ; 7835716. ⟨10.1109/TSG.2017.2660580⟩

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:cea-01917811

DOI: 10.1109/TSG.2017.2660580

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