The Social Cost of Individual Privacy in Aggregated Residential Demand Response

There is an increasing body of experimental and theoretical research related to demand response using smart, connected home equipment in smart grid. However, as technologies are deployed at scale, privacy has become a major concern. One possible approach to address this concern is to model an entire home as an aggregated unit of resource for engaging in demand response. Such an approach would allow residents to participate in demand response while abstracting the specifics of the appliance usage pattern from the utility provider. The benefits of privacy-preserving demand response notwithstanding, it implies a cost in terms of wasted capacity. This paper aims to explore the privacy/capacity tradeoff by simulating a fleet of homes and comparing the results with a fleet of individual appliances. The results show that a fleet of homes only bids about 70% of available capacity, and in the presence of an aggregator this number declines to 50%. Thus, privacy of individual homes comes at a cost of sacrificing part of otherwise available capacity.