Pricing under Demand Flexibility and Predictability

This chapter focuses on demand‐side flexibilities and the predictability of consumer activities. It discusses the means of exploiting these aspects of consumer behavior by using smart pricing techniques. The chapter provides an example design of pricing policies for the day‐ahead electricity markets with flexible demand and an example optimization of smart pricing policies for demand shaping and proactive data services. It also focuses on the smart electricity grid to explore demand‐side flexibilities deeper with more specific examples. The chapter reviews two smart pricing methods that harness the temporal flexibilities of consumers to obtain smoother grid load. It evaluates the cost profile and proactive data service allocation and the pricing strategies leveraged to attain the new profiles.