Adaptive thermostat control in residential buildings through uniform clearing price mechanism

Demand response (DR) is potentially an effective tool in the smart grid that allows shifting electric load demand to less congested time slots. These peak-load shaving measures serve to alleviate grid congestion, minimize cost of electricity generation and help in reducing the electricity bills of retail customers. This work considers a demand response approach whereby the local electricity utility (aggregator or load serving entity) takes control of the thermostat of the buildings of participating customers and retains the right to regulate the temperature upto a user-defined amount when the grid is approaching overload conditions. A customers participating in this program declare its user discomfort index, which is a measure of the amount of money the customer expects in return from the utility for temporarily relinquishing its thermostat control. Based on these declared values and the thermal characteristics of the buildings (assumed to be known/estimated by utilities), the utility implements a selection algorithm to choose the least expensive buildings and controls their temperature in return for monetary compensation (or credits). We compare and study the properties of this DR mechanism under two different payment rules associated with: (a) the pay-as-you-bid mechanism, and (b) the uniform clearing price mechanism. Under a test scenario, we demonstrate that such mechanisms are able to bring down overall demand while ensuring the utility does not lose any money. It also ensures that participating customers get a discount on their monthly electricity bills while at the same time resulting in substantial peak-load shaving.