Electricity Pricing and Consumer Response: Smart Appliances | Saed Alizamir | Smart Grid Seminar

Smart technologies have enabled utility firms to experiment with various forms of Demand Response (DR) programs. DR programs have mixed results, as consumers demonstrate limited response to random shocks. How can we capture the limited consumer response to external random shocks in the residential sector? Most research in this area doesn’t take into account random factors or cognitive barriers.

Saed Alizamir presents a theoretical basis to understand the empirical electricity consumption patterns. Electricity consumption follows a quadratic pattern. Perfectly responsive and rational inattention consumer models. Smart devices will make our consumer problem formulation more accurate. What we care about is the overall consumption quantity. Firms must set price based on if customers are being non-responsive or responsive.