Modeling price elasticity of electricity demand using AIDS

In this paper, we utilise demand theory to analyse electricity consumption behaviour of household customers in the scenario of smart grid, where loads of smart home appliances are scheduled with home management systems to maximise individual user´s utility under Real-Time Price (RTP). An analytic model for the price responsive behaviours of electricity consumption is established using Almost Ideal Demand System (AIDS), from which both self- and cross-elasticities of electricity consumption can be estimated. The proposed model is evaluated using data populated from a Multi-Agent System (MAS) that simulates electricity consumption behaviours, and the results show the effectiveness of AIDS in modelling price responsive electricity consumption. The proposed model, together with MAS simulation, provides a useful framework for utility companies or policy makers to evaluate the effectiveness and benefits of RTP and demand response (DR) programs in particular during planning stage where real-life consumption data is unavailable.