Optimal smart grid tariffs

Abstract

In this paper, we develop a low-complexity scheme OpTar for designing optimal power tariffs. OpTar provides an easy way for the utility companies to adjust their power prices, and allows the users to pre-plan their power consumption. OpTar is robust against system dynamics including time-varying power market conditions and user preferences. It can be implemented both with and without communication between the utility company and the consumers, and requires minimum additional hardware/software. We show that OpTar can significantly outperform the commonly used uniform pricing schemes. The pricing design approach developed in the paper can also be used in other systems with dynamic demand and non-storable resources.