Deadline Differentiated Pricing of Deferrable Electric Loads

A large fraction of total electricity demand is comprised of end-use devices whose demand for energy is inherently deferrable in time. Of interest is the potential to use this latent flexibility in demand to absorb variability in power supplied from intermittent renewable generation. A fundamental challenge lies in the design of incentives that induce the desired response in demand. With an eye to electric vehicle charging, we propose a novel forward market for deadline-differentiated electric power service, where consumers consent to deferred service of prespecified loads in exchange for a reduced price for energy. The longer a consumer is willing to defer, the lower the price for energy. The proposed forward contract provides a guarantee on the aggregate quantity of energy to be delivered by a consumer-specified deadline. Under the earliest-deadline-first (EDF) scheduling policy, which is shown to be optimal for the supplier, we explicitly characterize a non-discriminatory, deadline-differentiated pricing scheme that yields an efficient competitive equilibrium between the supplier and consumers. We further show that this efficient pricing scheme, in combination with EDF scheduling, is incentive compatible in that every consumer would like to reveal her true deadline to the supplier, regardless of the actions taken by other consumers.