A Study of Pricing Policy for Demand Response of Home Appliances in Smart Grid Based on M2M

Demand Response (DR) is one of the core components of smart grid. Demand response is the management of electricity consumption of customer in response to supply conditions of smart grids, for example, during the peak hours or in response to electricity price the customers reduce their electricity consumption. In Demand response mechanisms, the shut off request is explicitly made, whereas the demand devices passively shut off when the grid observes the stress. Demand response curtail the power used and it can also start on-site power generation which may or may not be connected in parallel the smart grid. DR is different from the energy efficiency which means using less power to perform the same tasks or perform the same task on a continuous basis. At the same time, demand response is a component of smart energy demand, which also includes energy efficiency, home and building energy management, distributed renewable resources, and electric vehicle charging. In this paper, we propose a pricing policy mechanism based on the provider's prices announcement and control of the appliances remotely during peak hours of the day.