TY - JOUR
T1 - Toward a consumer-centric grid
T2 - A behavioral perspective
AU - Saad, Walid
AU - Glass, Arnold L.
AU - Mandayam, Narayan B.
AU - Poor, H. Vincent
N1 - Funding Information:
This work was supported by the U.S. National Science Foundation under Grants CNS-1446621, ECCS-1549894, ECCS-1549900, ACI-1541105, ACI-1541069, and ECCS-1549881.
Publisher Copyright:
© 2016 IEEE.
PY - 2016/4
Y1 - 2016/4
N2 - 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.
AB - 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.
KW - Consumer behavior
KW - demand-side management
KW - energy management
KW - prospect theory
KW - smart grid
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U2 - 10.1109/JPROC.2016.2520760
DO - 10.1109/JPROC.2016.2520760
M3 - Review article
AN - SCOPUS:84979466856
SN - 0018-9219
VL - 104
SP - 865
EP - 882
JO - Proceedings of the IEEE
JF - Proceedings of the IEEE
IS - 4
M1 - 7426734
ER -