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arXiv · 1511.01065

Towards a Consumer-Centric Grid: A Behavioral Perspective

Walid Saad·Arnold Glass·Narayan Mandayam·H. Vincent Poor
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Abstract

Active consumer participation is seen as an integral part of the emerging smart grid. Examples include demand-side management programs, incorporation of consumer-owned energy storage or renewable energy units, and active energy trading. However, despite the foreseen technological benefits of such consumer-centric grid features, to date, their widespread adoption in practice remains modest. To shed light on this challenge, this paper explores the potential of prospect theory, a Nobel-prize winning theory, as a decision-making framework that can help understand how risk and uncertainty can impact the decisions of smart grid consumers. After introducing the basic notions of prospect theory, several examples drawn from a number of smart grid applications are developed. These results show that a better understanding of the role of human decision-making within the smart grid is paramount for optimizing its operation and expediting the deployment of its various technologies.

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Walid Saad, Arnold Glass, Narayan Mandayam, H. Vincent Poor. 2015-11-01. Towards a Consumer-Centric Grid: A Behavioral Perspective. https://arxiv.org/abs/1511.01065

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