Incentivizing Intelligent Customer Behavior in Smart-Grids: A Risk-Sharing Tariff & Optimal Strategies

Georgios Methenitis, Michael Kaisers, Han La Poutré

Research output: Chapter in Book/Conference proceedings/Edited volumeConference contributionScientificpeer-review

5 Citations (Scopus)
94 Downloads (Pure)


Current electricity tariffs for retail rarely provideincentives for intelligent demand response of flexiblecustomers. Such customers could otherwisecontribute to balancing supply and demand in futuresmart grids. This paper proposes an innovativerisk-sharing tariff to incentivize intelligentcustomer behavior. A two-step parameterized paymentscheme is proposed, consisting of a prepaymentbased on the expected consumption, and asupplementary payment for any observed deviationfrom the anticipated consumption. Within a gametheoreticalanalysis, we capture the strategic con-flict of interest between a retailer and a customerin a two-player game, and we present optimal, i.e.,best response, strategies for both players in thisgame. We show analytically that the proposed tariffprovides customers of varying flexibility with variableincentives to assume and alleviate a fraction ofthe balancing risk, contributing in this way to theuncertainty reduction in the envisioned smart-grid.
Original languageEnglish
Title of host publicationProceedings of the Twenty-Fifth International Joint Conference on Artificial Intelligence (IJCAI-16)
EditorsSubbarao Kambhampati
Place of PublicationPalo Alto
PublisherAmerican Association for Artificial Intelligence (AAAI)
Number of pages7
ISBN (Electronic) 978-1-57735-770-4
Publication statusPublished - 2016
EventIJCAI 2016: 25th International Joint Conference on Artificial Intelligence - New York, United States
Duration: 9 Jul 201615 Jul 2016


ConferenceIJCAI 2016
Abbreviated titleIJCAI 2016
Country/TerritoryUnited States
CityNew York
Internet address

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