Impact of real-time pricing and residential load automation on distribution systems

Price-responsive electricity consumption can facilitate the efficient operations of power systems. In this paper, we study the impact of real-time pricing (RTP) and the automation of a major residential load - Heating, Ventilation, and Air Conditioning (HVAC) systems - on residential distribution systems. First, we deploy a simulation-based case study of 437 houses in Austin, Texas, which we calibrate based on real-world data. Second, we study the implications of switching from a fixed retail rate to RTP. We estimate aggregate welfare gains of 39 USD per customer and year. All customers contribute to the welfare gain, but not equally. Moreover, all customers benefit and benefits are higher for customers with electric heating, lower comfort preference, and lower thermal insulation. However, RTP and load automation can critically increase peak system load by more than 30%. Third, we study the introduction of a market-based demand management system under which the local RTP increases if congestion is present. In this case, for reasonable specifications, another 12% of welfare gains can be realized during operations. Moreover, optimal grid investment can be reduced. Our work informs policy makers by illustrating under which conditions load automation under RTP can be particularly beneficial.

Automated summary

This paper examines the impact of real-time pricing and load automation on residential distribution systems. The study finds that implementing real-time pricing can result in an aggregate welfare gain of 39 USD per customer and year. However, it also notes that RTP and load automation may significantly increase peak system load. Introducing a market-based demand management system can further enhance welfare gains and reduce grid investment.