Reducing Price Uncertainty through Demand Side Management

The integration of intermittent resources of power generation, such as wind and solar, will lead to unprecedented energy price fluctuations and increasing price uncertainty. Besides improving forecasting, electricity retailers can meet this challenge by partly adopting the demand side of the electricity markets to the fluctuating supply side. The necessary communication infrastructure for this so-called demand side management (DSM) such as dynamic pricing are relatively well understood. However, there is little known about the economic potential of DSM for retailers to reduce price uncertainty in deregulated markets. We present the foundation of a DSM system that targets both diminishing price uncertainty and reducing total expenditures. To succeed in these goals, we integrate DSM within the Energy Informatics Framework, derive an optimal strategy for DSM decisions and design an appropriate Information System. The evaluation of our Information System using a real-world scenario yields that expenditures of retailers can be significantly decreased.