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posted by cmn32480 on Thursday July 30 2015, @10:09AM   Printer-friendly
from the is-your-meter-smarter-than-a-5th-grader? dept.

Electricity companies increasingly install smart meters in order to stabilize the grid. The idea is simple: When there is high supply, the price goes down, while when there is little supply, prices go up. People therefore are more likely to wait for cheaper prices, thus the demand in low-supply times is reduced, and the demand in high-supply times is increased, resulting in a better match of supply and demand, and thus a more stable grid.

However now research at the University of Bremen shows that the smart meters may actually have the opposite effect. From the phys.org article:

"Our work examines the, at first sight, great idea to use smart electricity meters to dampen fluctuations in the electricity power nets," Stefan Bornholdt at the University of Bremen told Phys.org. "However, we find that under some conditions, consumers with such meters start competing and create a new artificial market which exhibits properties of real markets, such as bubbles and crashes. Thus, instead of dampening out fluctuations, it may create new ones. In this way, interacting smart meters may generate chaos instead of stability."

The mechanism they describe as follows:

"When laundry piles up, users (or algorithms in advanced machines) can adapt the threshold to a higher allowed price. When the fluctuating price then drops after a while from higher levels, those consumers who postponed their activity will then join the 'happy hour' of cheap electricity, leading to an avalanche of demand (reminding of some crowded bars at happy hour). This is a dynamic phenomenon which econophysics models, but not standard economic models, can represent."

The original article in Physical Review E is also freely available from arXiv.org.


Original Submission

 
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  • (Score: 1, Interesting) by Anonymous Coward on Thursday July 30 2015, @12:47PM

    by Anonymous Coward on Thursday July 30 2015, @12:47PM (#215850)

    The "magic number" effect can still kick in, just like on stock exchange. Most people will use round numbers as triggers. So if your kWh price goes from $0.303 to $0.301, it will have little effect, but if your price goes from $0.301 to $0.299, it will have a huge effect.

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  • (Score: 2) by Bill Evans on Friday July 31 2015, @11:40AM

    by Bill Evans (1094) on Friday July 31 2015, @11:40AM (#216258) Homepage

    True dat. But not everyone will pick the same point. The effect will be split among several points, thus solving much of the problem.