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Toward a Consumer-Centric Grid: A Behavioral Perspective

Author(s): Saad, Walid; Glass, Arnold L; Mandayam, Narayan B; Poor, H Vincent

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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.
Publication Date: 7-Mar-2016
Citation: Saad, Walid, Glass, Arnold L, Mandayam, Narayan B, Poor, H Vincent. (2016). Toward a Consumer-Centric Grid: A Behavioral Perspective. Proceedings of the IEEE, 104 (4), 865 - 882. doi:10.1109/jproc.2016.2520760
DOI: doi:10.1109/jproc.2016.2520760
ISSN: 0018-9219
EISSN: 1558-2256
Pages: 865 - 882
Type of Material: Journal Article
Journal/Proceeding Title: Proceedings of the IEEE
Version: Author's manuscript

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