Abstract:

For decades power systems academics have proclaimed the need for real time prices to create a more efficient grid.   The rationale is economics 101:   proper price signals will lead to an efficient outcome.   This talk surveys the many reasons why this conclusion is not observed in practice.   

Most significant today is that the standard model of consumer utility does not match reality:   the products of interest to the various "agents" are complex functions of time.  In particular, the product of interest to a typical consumer is only loosely related to electric power -- the quantity associated with price signals.    It is argued that this is a blessing from the point of view of load control but leaves open many questions regarding market design.  

The state of mathematical economics today is much like control theory in the 1980s.   Academics have heated debates about mathematical models without consideration of ground truth from experiments in the field.  The control community matured after dramatic failures illustrating the disconnect between theory and practice.  New techniques are needed that consider the highly complex nature of costs and benefits in the context of power systems and other microeconomic settings.  

The material in the lecture is taken from the recent survey:

Annual Review of Control, Robotics, and Autonomous Systems

Control Engineer Roles in the Next Power Market Transition  

https://www.annualreviews.org/content/journals/10.1146/annurev-control-030323-023057

Hala Ballouz,1 Joel Mathias,2 Sean Meyn,3

Robert Moye,4 and Joseph Warrington5