Residential electricity auction with uniform pricing and cost constraints

Abstract

This paper considers electricity auctions as auctions of a divisible good when the bidders have soft cost constraints. Soft cost constraints are such that the bidder proportionally reduces the desired quantity when the price is over a defined threshold. We prove a policy-consistent mechanism to allocate the goods using uniform pricing. Further, the mechanism is communication efficient and polynomial time computable. We finish by describing how the auction mechanism could work for residential real time electricity pricing using intelligent programmable communicating thermostats.