# Economic information from Smart Meter: Nexus Between Demand Profile and Electricity Retail Price Between Demand Profile and Electricity Retail Price

## TL;DR

This paper shows that consumer demand profiles, rather than demand levels, determine their impact on system costs, and proposes a profile-based pricing scheme evaluated through a new efficiency criteria system using real Chinese distribution data.

## Contribution

It introduces a novel criteria system to evaluate retail price schemes' efficiency based on demand profile clustering, independent of detailed cost data.

## Key findings

- Demand profile clustering aligns with marginal impact on system costs.
- Profile-based uniform pricing can be economically efficient.
- Targeting high-impact days improves efficiency more than targeting high-impact consumers.

## Abstract

In this paper, we demonstrate that a consumer's marginal system impact is only determined by their demand profile rather than their demand level. Demand profile clustering is identical to cluster consumers according to their marginal impacts on system costs. A profile-based uniform-rate price is economically efficient as real-time pricing. We develop a criteria system to evaluate the economic efficiency of an implemented retail price scheme in a distribution system by comparing profile clustering and daily-average clustering. Our criteria system can examine the extent of a retail price scheme's inefficiency even without information about the distribution system's daily cost structure. We analyze data from a real distribution system in China. In this system, targeting each consumer's high-impact days is more efficient than target high-impact consumers.