A probabilistic approach to design of real-time pricing systems over communication networks

In design of demand response programs, real-time pricing plays an important role. In real-time pricing systems, information of the price and power consumption is sent to an ISO (independent system operator) and consumers (i.e., smart meters) through communication networks. Hence, this system can be regarded as a class of networked control systems. In this paper, design of real-time pricing systems over communication networks is discussed. First, a probabilistic discrete model expressing the relation between the price and power consumption is explained. In addition, effects of communication networks are also explained, and directed graphs with communication properties are introduced. Next, the pricing problem is reduced to a mixed integer linear programming problem. Finally, a numerical simulation is presented.