Smart Grid not so smart

Feedback loops are a bitch. [Link]

Research scientist Mardavij Roozbehani and professors Sanjoy Mitter and Munther Dahleh assumed that every consumer has a “utility function” describing how inconvenient it is for him or her to defer electricity usage. While that function will vary from person to person, individual utility functions can be pooled into a single collective function for an entire population. The researchers assumed that on average, consumers will seek to maximize the difference between the utility function and the cost of electricity: That is, they’ll try to get as much convenience for as little money as possible.

What they found was that if consumer response to price fluctuation is large enough to significantly alter patterns of energy use — and if it’s not, there’s no point in installing smart meters — then price variations well within the normal range can cause dangerous oscillations in demand. “For the system to work, supply and demand must match almost perfectly at each instant of time,” Roozbehani says. “The generators have what are called ramp constraints: They cannot ramp up their production arbitrarily fast, and they cannot ramp it down arbitrarily fast. If these oscillations become very wild, they’ll have a hard time keeping track of the demand. And that’s bad for everyone.”

The researchers’ model, however, also indicates that at least partially shielding consumers from the volatility of the market could tame those oscillations. For instance, Roozbehani explains, utilities could give consumers price updates every hour or so, instead of every five minutes. Or, he says, “if the prices in the wholesale market are varying very widely, I pass the consumer a price that reflects the wholesale market conditions but not to that extent. If the prices in the wholesale market just doubled, I don’t give the consumer a price that is double the previous time interval but a price that is slightly higher.” According to Roozbehani, the same theoretical framework that he and his colleagues adopt in their paper should enable the analysis and development of practical pricing models.