The University of Southampton
University of Southampton Institutional Repository

An axiomatic framework for ex-ante dynamic pricing mechanisms in smart grid

An axiomatic framework for ex-ante dynamic pricing mechanisms in smart grid
An axiomatic framework for ex-ante dynamic pricing mechanisms in smart grid
In electricity markets, the choice of the right pricing regime is crucial for the utilities because the price they charge to their consumers, in anticipation of their demand in real-time, is a key determinant of their profits and ultimately their survival in competitive energy markets. Among the existing pricing regimes, in this paper, we consider ex-ante dynamic pricing schemes as (i) they help to address the peak demand problem (a crucial problem in smart grids), and (ii) they are transparent and fair to consumers as the cost of electricity can be calculated before the actual consumption. In particular, we propose an axiomatic framework that establishes the conceptual underpinnings of the class of ex-ante dynamic pricing schemes. We first propose five key axioms that reflect the criteria that are vital for energy utilities and their relationship with consumers. We then prove an impossibility theorem to show that there is no pricing regime that satisfies all the five axioms simultaneously. We also study multiple cost functions arising from various pricing regimes to examine the subset of axioms that they satisfy. We believe that our proposed framework in this paper is first of its kind to evaluate the class of ex-ante dynamic pricing schemes in a manner that can be operationalised by energy utilities.
Bandhyopadhyay, Sambaran
988ed349-4d30-42ad-a7ac-7ce738396457
Narayanam, Ramasuri
99ad1dcb-bc3d-4cd4-a0b3-a5e7e6708db9
Kumar, Pratyush
cc3395e2-8dc6-4a26-ba49-8155e084feb9
Ramchurn, Sarvapali Dyanand
1d62ae2a-a498-444e-912d-a6082d3aaea3
Arya, Vijay
d7af1141-c565-466a-a445-901b601497e4
Petra, Iskandarbin
1471c6ae-d58d-41d6-acfb-39e0257c0f3c
Bandhyopadhyay, Sambaran
988ed349-4d30-42ad-a7ac-7ce738396457
Narayanam, Ramasuri
99ad1dcb-bc3d-4cd4-a0b3-a5e7e6708db9
Kumar, Pratyush
cc3395e2-8dc6-4a26-ba49-8155e084feb9
Ramchurn, Sarvapali Dyanand
1d62ae2a-a498-444e-912d-a6082d3aaea3
Arya, Vijay
d7af1141-c565-466a-a445-901b601497e4
Petra, Iskandarbin
1471c6ae-d58d-41d6-acfb-39e0257c0f3c

Bandhyopadhyay, Sambaran, Narayanam, Ramasuri, Kumar, Pratyush, Ramchurn, Sarvapali Dyanand, Arya, Vijay and Petra, Iskandarbin (2016) An axiomatic framework for ex-ante dynamic pricing mechanisms in smart grid. Proceedings of the Thirtieth AAAI Conference on Artificial Intelligence (AAAI-16), United States. 01 Feb 2016. 7 pp .

Record type: Conference or Workshop Item (Paper)

Abstract

In electricity markets, the choice of the right pricing regime is crucial for the utilities because the price they charge to their consumers, in anticipation of their demand in real-time, is a key determinant of their profits and ultimately their survival in competitive energy markets. Among the existing pricing regimes, in this paper, we consider ex-ante dynamic pricing schemes as (i) they help to address the peak demand problem (a crucial problem in smart grids), and (ii) they are transparent and fair to consumers as the cost of electricity can be calculated before the actual consumption. In particular, we propose an axiomatic framework that establishes the conceptual underpinnings of the class of ex-ante dynamic pricing schemes. We first propose five key axioms that reflect the criteria that are vital for energy utilities and their relationship with consumers. We then prove an impossibility theorem to show that there is no pricing regime that satisfies all the five axioms simultaneously. We also study multiple cost functions arising from various pricing regimes to examine the subset of axioms that they satisfy. We believe that our proposed framework in this paper is first of its kind to evaluate the class of ex-ante dynamic pricing schemes in a manner that can be operationalised by energy utilities.

Text
camera_ready_Axiomatic_paper.pdf - Other
Download (320kB)

More information

e-pub ahead of print date: February 2016
Venue - Dates: Proceedings of the Thirtieth AAAI Conference on Artificial Intelligence (AAAI-16), United States, 2016-02-01 - 2016-02-01
Organisations: Agents, Interactions & Complexity

Identifiers

Local EPrints ID: 386417
URI: https://eprints.soton.ac.uk/id/eprint/386417
PURE UUID: b9257eeb-8c47-47ba-9866-a9f7ac381a23
ORCID for Sarvapali Dyanand Ramchurn: ORCID iD orcid.org/0000-0001-9686-4302

Catalogue record

Date deposited: 26 Jan 2016 16:58
Last modified: 06 Jun 2018 12:42

Export record

Contributors

Author: Sambaran Bandhyopadhyay
Author: Ramasuri Narayanam
Author: Pratyush Kumar
Author: Sarvapali Dyanand Ramchurn ORCID iD
Author: Vijay Arya
Author: Iskandarbin Petra

University divisions

Download statistics

Downloads from ePrints over the past year. Other digital versions may also be available to download e.g. from the publisher's website.

View more statistics

Atom RSS 1.0 RSS 2.0

Contact ePrints Soton: eprints@soton.ac.uk

ePrints Soton supports OAI 2.0 with a base URL of https://eprints.soton.ac.uk/cgi/oai2

This repository has been built using EPrints software, developed at the University of Southampton, but available to everyone to use.

We use cookies to ensure that we give you the best experience on our website. If you continue without changing your settings, we will assume that you are happy to receive cookies on the University of Southampton website.

×