Time-dependent electricity pricing using variable announcement horizons

Philipp Artur Kienscherf*, John Collins, Carlee Joe-Wong, Wolfgang Ketter, Soumya Sen

*Corresponding author for this work

Research output: Contribution to journalArticleAcademicpeer-review

Abstract

In the battle against climate change, electrification plays an increasingly large role in our society. The growing use of electricity networks requires advanced coordination mechanisms to avoid the tragedy of the commons. In this paper, we explore the effects of optimum time-dependent pricing (TDP) on supplier surplus within electricity markets, using a parameterized optimization model. Varying not only the prices themselves, but also their announcement horizon, we show how the suppliers’ optimal decision depends on risk aversion, forecasting quality, and end-user flexibility. The inclusion of procurement risk in our model shows that TDP can be beneficial for suppliers when they want to actively manage risk, even if expected profits are lower. At the same time, the shifting of end-user demand to low-cost times reduces the overall system cost, and potentially carbon emissions.

Original languageEnglish
Article number14
JournalEnergy Informatics
Volume3
DOIs
Publication statusPublished - 28 Oct 2020

Bibliographical note

Funding Information:
Publication costs were covered by the DACH+ Energy Informatics Conference Organizers, supported by the Swiss Federal Office of Energy.

Publisher Copyright:
© 2020, The Author(s).

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