With the rapid growth in residential smart meters across the United States in recent years, most homes will soon be capable of moving to time varying prices for electricity. We discuss a methodology for studying the welfare impacts of different pricing strategies on an electricity market when homes deploy smart, price responsive appliances with forward-looking capabilities, and understanding its effects on social welfare and consumer surplus. We show conditions under which asymptotically, as the number of homes increases, social welfare-maximizing price schedules in equilibrium are linear in load. Real data are used to calibrate a smart thermostat model to compare dynamic pricing strategy against flat and peak pricing strategies when smart thermostats are deployed across ComEd's service territory of 3.5 million residential homes.
Daniel Adelman, PhD., is the Charles I. Clough Jr. Professor of Operations Management at the University of Chicago Booth School of Business. Adelman is a leading expert in business analytics, helping firms and institutions deploy data and decision analysis to build world-class strategic and tactical management capabilities. He conducts research on foundations of the operations research field, as well as studies the link between operational performance metrics and financial performance.
He leads the Healthcare Analytics Laboratory at Chicago Booth, in which teams of students work on real-world projects with providers to improve healthcare delivery through the analysis of large datasets. The lab has conducted projects in population health, hospital readmissions, bundled payment reimbursement, case mix optimization, hospital scheduling, nurse benchmarking, and others. Adelman also developed and teaches a course on Healthcare Data Analytics that draws students from around the University of Chicago campus.
Adelman received a PhD in Industrial Engineering and Operations Research in 1997 from the Georgia Institute of Technology, where he also received a BS degree in industrial engineering and a MS in Operations Research. Adelman joined the Chicago Booth faculty in 1997.