Surge Pricing is a hot topic in Delhi and that is the case in many other cities, where, for passions are aroused, because suddenly the consumer realizes that their demand can be met if they are willing to pay a higher price. The other part of the story, is that Buyers are also eager to meet the consumers demand.
Look at our country's Power Infrastructure. There is a phenomenal latent demand which goes unmet every hour and no body wants to talk about it for fear of being politically incorrect. I refuse to believe that when the mobile phone has become so ubiquitous with modern day living status, the consumer would not spare a few more rupees for their electricity.
So let us apply Surge Pricing algorithm to Electricity and see the possibilities of how this can be made useful.
Electricity consumers are grouped into many categories. Some of the categories are Bulk Industries, Medium & Small Industries, Bulk Commercial, Retail Commercial, Essential, Residential large and Residential Small. We can select a few and see how Surge Pricing can work for them.
Bulk Industries / Commercial: Most of the bulk industries have their own captive plants and can participate in the Surge Pricing most effectively. Whenever Power is available below their marginal cost of generation, they can be Buyers and the moment it goes up they can turn to sellers. They also have the metering infrastructure and manpower to implement this immediately.
Residential large and Residential Small: This category is the most affected in the electricity consumer list as they come at the end of the 'Supply' chain, being at the end of the Transmission network. Most of the times the 'Last Mile Distribution Infrastructure' is the bottleneck. They are also provided with Archaic meter infrastructure. But most of them carry around a powerful Smart Phone which can run the 'Surge Pricing algorithm and some of them have 'Home' Network with reasonable band width to support an additional piece of hardware which can be pinged from remote. To make this feasible the existing Meter has to be substituted with an Electronic meter with a communicating chip and provided with adequate RAM to run the instructions received. In addition a switching device with control to the meter (and so can be operated from remote) has to be installed.
Let us limit ourselves to discussing implementing 'Surge Pricing' to these two categories. Having identified the possibility of providing reasonable infrastructure and connectivity, we need to discuss as to how to go about Surge pricing?
A Consumer has to opt for it and deposit an additional amount depending on the estimated consumption for a given period. The amount to be collected may vary from consumer to consumer depending on their category and their willingness to invest. A minimum period can be set, which would incentivize the utility to supplement their infrastructure and switching networks.
Once this is done, 'Bots' can provide solutions and pricing options to consumers. Immediately we will have so many options and improvements. The utility shall also have to absorb penalties for not meeting the demand, if they fail to meet after accepting 'surge pricing'.
Enabling provisions have to be introduced as well.
These are initial thoughts and we can discuss and improve it.
