Smart Grid Seminar

A large fraction of the total electric load is comprised of end-use devices whose energy demand is inherently deferrable in time. Clearly, this latent flexibility in demand can be leveraged to absorb variability in power supplied from intermittent renewable generation. The challenge, however, lies in designing incentives to induce the desired response in demand.

We propose a novel forward market, where consumers consent to deferred service of pre-specified loads in exchange for a reduced per-unit price for energy. Under the earliest-deadline-first (EDF) scheduling policy, which is shown to be optimal for the supplier, we explicitly characterize the deadline-differentiated pricing scheme that yields an efficient competitive equilibrium between supply and demand. Somewhat surprisingly, we further show that this efficient pricing scheme, in combination with EDF scheduling, is incentive compatible (IC) in that every consumer would like to reveal her true deadline, regardless of the actions taken by other consumers.