A fuse control paradigm for demand side management: Formulation and stochastic pricing analysis

We consider a novel paradigm for demand side management that is based on the so called fuse control concept. We assume that an aggregator communicates with a household only at the meter, imposing a fuse limit, i.e. a restriction in the total consumption level within a given time frame. Consumers are then responsible to adjust the set-points of the individual household devices accordingly to meet the imposed fuse limit. We formulate the problem as a stochastic household management program, with stochasticity arising due to local photovoltaic generation. We show how a demand bidding curve for fuse increments can be constructed as a by-product of the developed problem and provide a rigorous pricing analysis that results in a probabilistic envelope around the “shadow” prices of the deterministic variant of the considered problem, inside which the “shadow” prices of the stochastic one are confined to lie. To evaluate the efficacy of the proposed approach we compare it with an idealized set-up that involves tracking of real-time market price signals.