Equitable Time-Varying Pricing Tariff Design: A Joint Learning and Optimization Approach

• URL: http://arxiv.org/abs/2307.15088v1
• Date: Wed, 26 Jul 2023 20:14:23 GMT
• Title: Equitable Time-Varying Pricing Tariff Design: A Joint Learning and Optimization Approach
• Authors: Liudong Chen and Bolun Xu
• Abstract summary: Time-varying pricing tariffs incentivize consumers to shift their electricity demand and reduce costs, but may increase the energy burden for consumers with limited response capability. This paper proposes a joint learning-based identification and optimization method to design equitable time-varying tariffs.
• Score: 0.0
• License: http://arxiv.org/licenses/nonexclusive-distrib/1.0/
• Abstract: Time-varying pricing tariffs incentivize consumers to shift their electricity demand and reduce costs, but may increase the energy burden for consumers with limited response capability. The utility must thus balance affordability and response incentives when designing these tariffs by considering consumers' response expectations. This paper proposes a joint learning-based identification and optimization method to design equitable time-varying tariffs. Our proposed method encodes historical prices and demand response data into a recurrent neural network (RNN) to capture high-dimensional and non-linear consumer price response behaviors. We then embed the RNN into the tariff design optimization, formulating a non-linear optimization problem with a quadratic objective. We propose a gradient-based solution method that achieves fast and scalable computation. Simulation using real-world consumer data shows that our equitable tariffs protect low-income consumers from price surges while effectively motivating consumers to reduce peak demand. The method also ensures revenue recovery for the utility company and achieves robust performance against demand response uncertainties and prediction errors.

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