OPTIMAL PRICING STRATEGY TO REDUCE FUEL CONSUMPTION IN ELECTRICITY GENERATION WITH SMART METER

It has been widely recognized that the efficiency of a thermal power system can be improved by technological advancement of electricity generation and manipulation of electricity consumption.The smart meter enables two-way communication between the customers and the electricity generation system.The electricity generation system uses price incentive(i.e.a higher price in the peak period and a lower price in the off-peak period) to shift part of demands from peak to off-peak period under the smart grid environment.Given the fact that fuel consumption in each period is a strictly increasing convex function of power output,we propose two-period and multi-period pricing strategies,and study the effect of different pricing strategies on reducing fuel consumption.