Crowdsourcing Behavioral Incentives for Pervasive Demand Response

1 Introduction Demand response (DR) refers to a set of dynamic demand mechanisms that aim to manage electricity consumption in response to supply-side signals. DR can be used for the purpose of demand regulation (e.g. to maintain voltage and frequency within safety limits) as well as for energy balance (e.g. to shift demand to off-peak periods, to curtail demand during emergency situations, or to offset fluctuations caused by less predictable energy sources such as wind or solar). DR is often carried out through direct load control (DLC), in which case it is called direct DR or dispatchable DR. Nevertheless, consumer behavior can also be influenced by using indirect methods of DR such as incentives, real-time information, or dynamic pricing. This second type of DR is called indirect DR or reactive DR. Direct DR has the advantage that the expected outcome of a DR signal is measurable and quantifiable. For this reason, commercial and industrial energy consumers are today's preferred candidates for participation in DR programs; they are able to contribute large reductions in demand through direct control of thermal loads (e.g. heating or refrigerators), higher predictability, lower user discomfort and relatively low installation costs. Although the residential sector makes up 20% of total energy demand and 60% of peak load demand, it still remains a relatively untapped DR resource. There are multiple reasons behind the residential sector's limited involvement in DR programs. Privacy and security are two of these. Concerns about the possibility of an external entity—whether it is legitimate or not—controlling appliances and energy consumption in private homes deterred the widespread involvement of residential consumers in DR programs. As an example, in 2008, a German civil rights and privacy campaign group awarded Yello Strom GmbH with the " Big Brother Award " due to the company's plans to introduce smart meters to its customers. Keeping data storage and the control of appliances on the household premises therefore seems to be a preferable path towards the involvement of residential consumers in DR. Another reason for the failure to engage the residential sector in DR programs is that the financial incentives for their participation (e.g. savings on the monthly bills) are not great. In most countries, electricity is generally a small percentage of consumers' total expenditure. For example, in the U.S., electricity expenditure represents 2.8% of total income. Given that the savings made from participation in DR programs represent between 2% …