Intraday Increasing Block Pricing for the Residential Electricity Sector

Designing pricing schemes for the electricity retail market is an emerging area with significant impact on the smart grid. This paper proposes the Intraday Increasing Block Pricing scheme, where charging is based on intraday pricing periods. The electricity consumed in each pricing period is split into consumption-blocks with increasing prices. The goal of consumers is to reduce their consumption within each pricing period by distributing their load throughout the day to avoid higher prices. In addition to explaining the proposed pricing scheme, the paper models the retail market behaviour when considering rational consumers. The resulting model is a convex optimization problem that can be utilized as a tool to evaluate the impact of the proposed pricing scheme on consumers and the power system. Different case studies demonstrate the consumer interaction with the proposed scheme and provide evidence on the improvement of power system efficiency, consumer surplus and social equity promotion.