Dynamic pricing of power in Smart-Grid networks

In this paper we introduce the problem of dynamic pricing of power for smart-grid networks. We consider a network utility maximization (NUM) framework in a deterministic setting with a single provider, multiple users and a finite horizon. The provider produces power or buys power in a (deterministic) spot market, and determines a dynamic price to charge the users. The users then adjust their demand in response to the time-varying prices. This is typically categorized as the problem of demand response, and we study a progression of related models by focusing on the characterization of the structure of the optimal dynamic prices in the Smart Grid and the optimal demand and supply under various interaction with a spot market.