Start Date
11-8-2016
Description
Dynamic electricity pricing is considered a primary lever for improving supply-demand coordination in future smart energy markets. Yet, customer acceptance of complex pricing schemes is limited which prompts utility companies to focus on simpler time-of-use rate designs. Muratori and Rizzoni (2015) show that a combination of TOU rates with customer segmentation approaches can realize highly cost-efficient grid operations. We apply a design-oriented research approach to develop an artifact which facilitates integrated customer segmentation and tariff design decisions while incorporating strategic customer behavior. We evaluate the artifact using empirical data and find that while these tariffs are indeed efficient from a societal perspective, it is not profitable for suppliers to offer them. Based on these findings we propose future research avenues to reconcile supplier strategies with customer expectations to pave the way for a more sustainable power system.
Recommended Citation
Stein, Nikolai and Flath, Christoph, "Decision Support for Group-based Electricity Prices in Smart Grids" (2016). AMCIS 2016 Proceedings. 10.
https://aisel.aisnet.org/amcis2016/GreenIS/Presentations/10
Decision Support for Group-based Electricity Prices in Smart Grids
Dynamic electricity pricing is considered a primary lever for improving supply-demand coordination in future smart energy markets. Yet, customer acceptance of complex pricing schemes is limited which prompts utility companies to focus on simpler time-of-use rate designs. Muratori and Rizzoni (2015) show that a combination of TOU rates with customer segmentation approaches can realize highly cost-efficient grid operations. We apply a design-oriented research approach to develop an artifact which facilitates integrated customer segmentation and tariff design decisions while incorporating strategic customer behavior. We evaluate the artifact using empirical data and find that while these tariffs are indeed efficient from a societal perspective, it is not profitable for suppliers to offer them. Based on these findings we propose future research avenues to reconcile supplier strategies with customer expectations to pave the way for a more sustainable power system.