IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v333y2023ics0306261922018839.html
   My bibliography  Save this article

Multiple dynamic pricing for demand response with adaptive clustering-based customer segmentation in smart grids

Author

Listed:
  • Meng, Fanlin
  • Ma, Qian
  • Liu, Zixu
  • Zeng, Xiao-Jun

Abstract

In this paper, we propose a realistic multiple dynamic pricing approach to demand response in the electricity retail market. First, an adaptive clustering-based customer segmentation framework is proposed to categorize customers into different groups to enable the effective identification of usage patterns. Second, customized demand models with important market constraints which capture the price–demand relationship explicitly, are developed for each group of customers to improve the model accuracy and enable meaningful pricing. Third, the multiple pricing based demand response is formulated as a profit maximization problem subject to realistic market constraints. The overall aim of the proposed scalable and practical method aims to achieve ‘right’ prices for ‘right’ customers so as to benefit various stakeholders in the system. The proposed multiple pricing framework is evaluated via simulations based on real-world datasets. We find that: (1) the adaptive clustering based approach can capture the dynamically changing consumption patterns of customers, and enable the dynamic group based demand modelling; and (2) the multiple pricing strategy could achieve better profit gain for the retailer compared with the uniform pricing due to its reduced electricity purchasing cost in the wholesale market.

Suggested Citation

  • Meng, Fanlin & Ma, Qian & Liu, Zixu & Zeng, Xiao-Jun, 2023. "Multiple dynamic pricing for demand response with adaptive clustering-based customer segmentation in smart grids," Applied Energy, Elsevier, vol. 333(C).
    • Handle: RePEc:eee:appene:v:333:y:2023:i:c:s0306261922018839
    DOI: 10.1016/j.apenergy.2022.120626
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261922018839
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2022.120626?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Zhang, Chao & Lasaulce, Samson & Hennebel, Martin & Saludjian, Lucas & Panciatici, Patrick & Poor, H. Vincent, 2021. "Decision-making oriented clustering: Application to pricing and power consumption scheduling," Applied Energy, Elsevier, vol. 297(C).
    2. Christoph Flath & David Nicolay & Tobias Conte & Clemens Dinther & Lilia Filipova-Neumann, 2012. "Cluster Analysis of Smart Metering Data," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 4(1), pages 31-39, February.
    3. Ruan, Jiaqi & Liu, Guolong & Qiu, Jing & Liang, Gaoqi & Zhao, Junhua & He, Binghao & Wen, Fushuan, 2022. "Time-varying price elasticity of demand estimation for demand-side smart dynamic pricing," Applied Energy, Elsevier, vol. 322(C).
    4. Zhong, Shengyuan & Wang, Xiaoyuan & Zhao, Jun & Li, Wenjia & Li, Hao & Wang, Yongzhen & Deng, Shuai & Zhu, Jiebei, 2021. "Deep reinforcement learning framework for dynamic pricing demand response of regenerative electric heating," Applied Energy, Elsevier, vol. 288(C).
    5. Hong, Qiuyi & Meng, Fanlin & Liu, Jian & Bo, Rui, 2023. "A bilevel game-theoretic decision-making framework for strategic retailers in both local and wholesale electricity markets," Applied Energy, Elsevier, vol. 330(PA).
    6. Rocha, Helder R.O. & Honorato, Icaro H. & Fiorotti, Rodrigo & Celeste, Wanderley C. & Silvestre, Leonardo J. & Silva, Jair A.L., 2021. "An Artificial Intelligence based scheduling algorithm for demand-side energy management in Smart Homes," Applied Energy, Elsevier, vol. 282(PA).
    7. Simshauser, Paul & Whish-Wilson, Patrick, 2017. "Price discrimination in Australia's retail electricity markets: An analysis of Victoria & Southeast Queensland," Energy Economics, Elsevier, vol. 62(C), pages 92-103.
    8. Lu, Renzhi & Hong, Seung Ho & Zhang, Xiongfeng, 2018. "A Dynamic pricing demand response algorithm for smart grid: Reinforcement learning approach," Applied Energy, Elsevier, vol. 220(C), pages 220-230.
    9. Srinivasan, Dipti & Rajgarhia, Sanjana & Radhakrishnan, Bharat Menon & Sharma, Anurag & Khincha, H.P., 2017. "Game-Theory based dynamic pricing strategies for demand side management in smart grids," Energy, Elsevier, vol. 126(C), pages 132-143.
    10. Zugno, Marco & Morales, Juan Miguel & Pinson, Pierre & Madsen, Henrik, 2013. "A bilevel model for electricity retailers' participation in a demand response market environment," Energy Economics, Elsevier, vol. 36(C), pages 182-197.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hua Chen & Shuang Dai & Fanlin Meng, 2023. "Smart Building Thermal Management: A Data-Driven Approach Based on Dynamic and Consensus Clustering," Sustainability, MDPI, vol. 15(21), pages 1-25, October.
    2. Qiuyi Hong & Fanlin Meng & Jian Liu, 2023. "Customised Multi-Energy Pricing: Model and Solutions," Energies, MDPI, vol. 16(4), pages 1-31, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Cai, Qiran & Xu, Qingyang & Qing, Jing & Shi, Gang & Liang, Qiao-Mei, 2022. "Promoting wind and photovoltaics renewable energy integration through demand response: Dynamic pricing mechanism design and economic analysis for smart residential communities," Energy, Elsevier, vol. 261(PB).
    2. Qiuyi Hong & Fanlin Meng & Jian Liu, 2023. "Customised Multi-Energy Pricing: Model and Solutions," Energies, MDPI, vol. 16(4), pages 1-31, February.
    3. Omar Al-Ani & Sanjoy Das, 2022. "Reinforcement Learning: Theory and Applications in HEMS," Energies, MDPI, vol. 15(17), pages 1-37, September.
    4. Zhang, Li & Gao, Yan & Zhu, Hongbo & Tao, Li, 2022. "Bi-level stochastic real-time pricing model in multi-energy generation system: A reinforcement learning approach," Energy, Elsevier, vol. 239(PA).
    5. Wen, Lulu & Zhou, Kaile & Li, Jun & Wang, Shanyong, 2020. "Modified deep learning and reinforcement learning for an incentive-based demand response model," Energy, Elsevier, vol. 205(C).
    6. Sabarathinam Srinivasan & Suresh Kumarasamy & Zacharias E. Andreadakis & Pedro G. Lind, 2023. "Artificial Intelligence and Mathematical Models of Power Grids Driven by Renewable Energy Sources: A Survey," Energies, MDPI, vol. 16(14), pages 1-56, July.
    7. Xu, Fangyuan & Zhu, Weidong & Wang, Yi Fei & Lai, Chun Sing & Yuan, Haoliang & Zhao, Yujia & Guo, Siming & Fu, Zhengxin, 2022. "A new deregulated demand response scheme for load over-shifting city in regulated power market," Applied Energy, Elsevier, vol. 311(C).
    8. Boza, Pal & Evgeniou, Theodoros, 2021. "Artificial intelligence to support the integration of variable renewable energy sources to the power system," Applied Energy, Elsevier, vol. 290(C).
    9. Huang, Pei & Sun, Yongjun, 2019. "A collaborative demand control of nearly zero energy buildings in response to dynamic pricing for performance improvements at cluster level," Energy, Elsevier, vol. 174(C), pages 911-921.
    10. Jiang, Qian & Mu, Yunfei & Jia, Hongjie & Cao, Yan & Wang, Zibo & Wei, Wei & Hou, Kai & Yu, Xiaodan, 2022. "A Stackelberg Game-based planning approach for integrated community energy system considering multiple participants," Energy, Elsevier, vol. 258(C).
    11. Luan, Wenpeng & Tian, Longfei & Zhao, Bochao, 2023. "Leveraging hybrid probabilistic multi-objective evolutionary algorithm for dynamic tariff design," Applied Energy, Elsevier, vol. 342(C).
    12. Xie, Jiahan & Ajagekar, Akshay & You, Fengqi, 2023. "Multi-Agent attention-based deep reinforcement learning for demand response in grid-responsive buildings," Applied Energy, Elsevier, vol. 342(C).
    13. Eduardo J. Salazar & Mauro Jurado & Mauricio E. Samper, 2023. "Reinforcement Learning-Based Pricing and Incentive Strategy for Demand Response in Smart Grids," Energies, MDPI, vol. 16(3), pages 1-33, February.
    14. Amiri-Pebdani, Sima & Alinaghian, Mahdi & Safarzadeh, Soroush, 2022. "Time-Of-Use pricing in an energy sustainable supply chain with government interventions: A game theory approach," Energy, Elsevier, vol. 255(C).
    15. Arega Getaneh Abate & Rosana Riccardi & Carlos Ruiz, 2021. "Dynamic tariffs-based demand response in retail electricity market under uncertainty," Papers 2105.03405, arXiv.org, revised Feb 2024.
    16. Cui, Weiwei & Li, Lin, 2018. "A game-theoretic approach to optimize the Time-of-Use pricing considering customer behaviors," International Journal of Production Economics, Elsevier, vol. 201(C), pages 75-88.
    17. Hendrik Hilpert & Johann Kranz & Matthias Schumann, 2013. "Leveraging Green IS in Logistics," Business & Information Systems Engineering: The International Journal of WIRTSCHAFTSINFORMATIK, Springer;Gesellschaft für Informatik e.V. (GI), vol. 5(5), pages 315-325, October.
    18. Sajjad Ali & Imran Khan & Sadaqat Jan & Ghulam Hafeez, 2021. "An Optimization Based Power Usage Scheduling Strategy Using Photovoltaic-Battery System for Demand-Side Management in Smart Grid," Energies, MDPI, vol. 14(8), pages 1-29, April.
    19. Shafqat Jawad & Junyong Liu, 2020. "Electrical Vehicle Charging Services Planning and Operation with Interdependent Power Networks and Transportation Networks: A Review of the Current Scenario and Future Trends," Energies, MDPI, vol. 13(13), pages 1-24, July.
    20. Sun, Alexander Y., 2020. "Optimal carbon storage reservoir management through deep reinforcement learning," Applied Energy, Elsevier, vol. 278(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:333:y:2023:i:c:s0306261922018839. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.