Understanding Customer Behavior in Multi-Tier Demand Response Management Program

In this paper, we investigate the factors that influence the customer’s decision in subscribing to a particular demand response management (DRM) scheme. Based on these factors, we suggest a classification of customer types that include non-green comfort seeking behavior (NCSB) and green incentive seeking behavior (GISB). We use multi-tier DRM plans that clearly specify the incentive and inconvenience for NCSB and GISB customers. The grid operator can obtain maximum profit margin (after paying out the incentives to participating users) from the DRM only if a specific number of customers participate in the NCSB and GISB plans. Any deviation from an ideal subscription pattern is undesirable from the grid’s perspective. We also develop a mathematical framework that is based on logistic regression and considers the quantifiable as well as unquantifiable attributes of customer behavior. This model captures the probabilistic nature of customer preferences for different DRM plans. Simulation results reveal that the actual subscription of customers in NCSB and GISB plans significantly deviates from the ideal values. From these, we determine a compromise solution that lies between the ideal and the actual solutions. We also identify that along with economic factors, social factors, such as peer pressure and prompting green or caring behavior, could also be used as potential tools by the grid operator to influence the customer preference. This paper can also be used by the grid operator to design appropriate multi-tier DRM plans.