Proposing a smart electricity pricing model for future smart grid

The idea of smart grid is currently receiving much attention. However, there are differences in understanding of concept of the smart grid and in how this concept should be implemented. The fact is that with a growing demand for an affordable, reliable and sustainable power supply, there is a need for smarter power system applying new technologies and tools to work more efficiently, more reliable with affordable price and with ability to accommodate more renewable energy sources, to reduce consumers carbon footprint and etc. One of the important aspects of the smart grid is customer's engagement and choice. The smart grid should provide an opportunity for the electricity consumers an affordable electricity price and also ability to choose when to use, what to use, and how much to pay for the electricity they use. So a smart electricity pricing mechanism is expected to provide this opportunity for the customers. The objective of this paper is firstly to briefly review the opportunities and challenges that smart grid technologies can provide to make grid capable of working far more efficiently, and secondly, to propose a smart electricity pricing model for customers.