Smart grids in the US: business and policy perspectives
Student name: Mr K. Rahul Sharma
Guide: Dr Najmur Rahman
Year of completion: 2011
Host Organisation: Yale University
Supervisor (Host Organisation): Mr Bryan Garcia
Abstract: Consumers today do not pay the real price of electricity even though it is clear that real-time or
dynamic pricing will increase welfare by flattening the load profile, reducing consumer
electricity bills and benefit the utility with reductions in peaking load requirements. Dynamic
pricing is the solution to this; and it is being implemented in several countries around the world
as part of the larger smart grid programmes. Dynamic pricing not only brings about immediate
bill reduction benefits, but also ensures that in the long-run, consumers become more sensitive to
electricity costs and invest in more energy efficient equipment or reduce/flatten their load
profiles. It has been conclusively shown through several pilots that dynamic pricing programmes
lead to significant reduction in load profiles and increase consumer participation in the
electricity sector.
This report is a comprehensive study of dynamic pricing programmes in the United States. The
basic methodology employed was surveys, interviews and software simulations. In this report,
various aspects of dynamic pricing are explored, to highlight best practices, case studies of
successful and unsuccessful smart grid projects, types of rates being used, and currently
available technologies. This report can be used to prepare a business case for smart grid
projects by utilities and also for gaining a better understanding of the dynamic pricing process.
Keywords: Smart-grids, Dynamic pricing, Advanced Metering Technology (AMI), Information
and Communication technology, Power sector reform.
