Title :
The intertemporal utility of demand and price elasticity of consumption in power grids with shiftable loads
Author :
Roozbehani, Mardavij ; Faghih, Ali ; Ohannessian, Mesrob I. ; Dahleh, Munther A.
Author_Institution :
Lab. for Inf. & Decision Syst. (LIDS), Massachusetts Inst. of Technol. (MIT), Cambridge, MA, USA
Abstract :
This paper presents a mathematical model of consumer behavior in response to stochastically-varying electricity prices, and a characterization of price elasticity of consumption induced by optimally shifting flexible demands within a fixed time window. The approach is based on deriving the optimal load-shifting policy through a finite horizon stochastic dynamic program, and the analysis is performed under both perfect and partial information about price distribution. An aggregate demand model is constructed from individual demands with random arrivals and random deadlines. Under this model, the aggregate demand becomes a function of price only, and thus allows for quantitative characterization of the utility of demand and price elasticity. While the demand for electricity is often deemed to be highly inelastic, it is shown in this paper that optimal load-shifting can create a considerable amount of price elasticity, even when the aggregate consumption over a long period remains constant.
Keywords :
consumer behaviour; load distribution; load forecasting; mathematical analysis; power consumption; power generation economics; power grids; pricing; consumer behavior; demand elasticity; finite horizon stochastic dynamic program; fixed time window; intertemporal utility; mathematical model; optimal load-shifting policy; optimally shifting flexible demand; power grid consumption; price distribution; price elasticity; random deadlines; stochastically-varying electricity price; Aggregates; Approximation methods; Consumer behavior; Dynamic programming; Elasticity; Electricity; Load modeling; Dynamic Programming; Intertemporal Utility; Mathematical Modeling of Consumer Behavior; Price Elasticity;
Conference_Titel :
Decision and Control and European Control Conference (CDC-ECC), 2011 50th IEEE Conference on
Conference_Location :
Orlando, FL
Print_ISBN :
978-1-61284-800-6
Electronic_ISBN :
0743-1546
DOI :
10.1109/CDC.2011.6161341