Real Time Pricing

Dr. Vikas Singh Bhadoria

 Introduction
• Important application of smart energy meters which benefits the consumers and the utility
companies.
• Smart meters help in providing all necessary data required for fixing such a time-
based tariff.
• Consumers could obtain a more organized data regarding their electricity consumption.
• Information reaches to the consumer at regular intervals as programmed and is also
accurate and error free, unlike the data obtained through manual meter reading.
• Utility companies could offer concession for electricity usage during light load hours.
• The consumers could schedule their heavy load operation accordingly.
 Contd...

• Utility companies can follow a more systematic procedure in controlling the energy
produced from conventional sources of energy according to the persisting demand
which is visible through the data provided by the smart meters.
• The smart energy meters generate a digital response to the fluctuations
in demand.
• Dynamic Pricing mechanism helps in improve effectiveness and reliability of a
smart grid by facilitating Demand Response.
• Traditionally, electricity consumption for residential consumers has been recorded
through bulk usage meters over a given period (typically 30 days)
• With the advent of smart meter technology, utilities can record this consumption
as often as every 15 minutes
 Contd...

• Smart meters enable consumers to monitor their load pattern and schedule it optimally for
cost savings and reduced strain on the grid
• Despite the promise of substantial economic gains, the deployment of dynamic pricing for
residential consumers has been remarkably tepid
• Today 5 % customers are on Advanced Metering Infrastructure (AMI) but less than one-tenth
of that number are estimated to be on dynamic pricing
• It is believed that dynamic pricing inflicts harm on low-income consumers, seniors, people with
disabilities, people with young children, and small businesses
• These consumers are unable to curtail peak period usage because they have very little
connected load to begin with
• Therefore, the greatest barriers in implementation of dynamic pricing are legislative and
regulatory, deriving from state efforts to protect retail customers from the vagaries of
competitive markets
Contd...

• The price of electricity for the entire day is decided and sent to the consumer the previous
night, so that he can plan his appliance usage accordingly.
• This price solely depends upon the demand in the network prevailing during that time.
• Electricity prices are high during peak hours, when the demand is high. This encourages
consumers to connect heavy loads during the non-peak hours.
• This benefits its consumer in cutting down the electricity bill. Also, this could make the load
duration curve almost flat.
• It does not require more power plants to be built to meet an excessively high peak, thereby
reducing carbon di oxide emissions. It would also reduce the stress on the transformer.
 The duration for which the pricing for energy
In order to consumption vary

utilize the
entire benefits The ability to buy energy when the prices are lower

of real time
The ability to control the operation of the appliances
pricing main and the ability to determine the energy prices at a
given time
criteria need to
be considered A smart meter that measures the total usage and the
time of usage of energy
Flat Rate Vs Dynamic Pricing
• Simple Pricing Mechanism • Customer Bill Reductions
• Least Risk • Reduced Network Congestion
• Reduced Wholesale Market Price
• Greater Benefits from DER
• Environmental Benefits
 Variable Peak Pricing Critical Peak Pricing Critical Peak Rebate

Types of Dynamic
Pricing
Why Real Time Pricing (RTP) ?

Purest form of dynamic pricing Highest financial rewards in

and ideal from a price signal comparison to other dynamic
perspective pricing mechanisms

Customers assume the risk of Customers pay electricity prices

wholesale price volatility and that are linked to the wholesale
are rewarded with less cost of cost of electricity on an hourly
service. (or sub-hourly) basis.
 Real Time Pricing in Smart Grid
“Smart Rates” are essential to realize the benefits of Smart Grid RTP:
• Encourages conservation and shifting of electricity consumption to times when electricity is
cheaper
• Motivates utilization of renewable resources like PV systems during high-priced peak times
when centralized power supply is constrained and/or transmission and distribution systems
are congested
• Improves the financial attractiveness of Distributed Energy Resources (DER). For example, if
for rooftop solar the peak period occurs during times of abundant solar generation, it can
result in significant cost savings
• Stimulates investment in energy-efficient appliances, helping customers conserve during
high-priced times
 Challenges

• The major challenge faced in the implementation of “real time” is that both the data collection and the
decision making must be completed within a minimal time .
• Due to the minimum time for notification in advance, there is a need for the development of a methodology
which is advanced and capable of finding an optimal solution as fast as possible.
• Hence the computational methodology involves high level of complexity.
• Because of the computational complexity involved, the methodology must be properly tested during the
developmental stages.
• Further, the collection of data from the online data sources must be ensured.
• The development of energy management system can ensure the collection of online data and assist in the
decision-making process.
• Further in industries and manufacturing companies, the main goal is to manufacture the required amount of
products in the given time.
• Their concern is to meet the production demand from the customers.
Contd...

• Therefore, the system production is treated as the priority.

• It is tedious to give a description between the production losses and energy saving.
• Hence, there is a potential risk of production loss and energy saving.
• The main goal of real time pricing and demand management from customer side is to
encourage the customers to use less energy during peak hours.
• Many argue that the demand management from load or consumer side is expensive
and ineffective due to high costs.
• Another major issue is the privacy of the users.
• Now a day, these are not of much concern because the electricity board can note the
purchasing pattern of a particular customer through ‘loyalty cards’.
Reference

• Aravind, E., & Vasudevan, S. K. (2015). Smart meter based on real time
pricing. Procedia Technology, 21, 120-124.
• Real Time Pricing Simulator for Smart Grids by Swantika Dhundia
https://www.slideshare.net/SwantikaDhundia/real-time-pricing-simulator-for-
smart-grids?from_action=save