Characterizing the Optimal Incentives for Pervasive Demand Response

While Demand Response (DR) has been focused on large and industrial consumers, pervasive implementation (by including residential consumers) is needed to maximize its potential. This paper presents analyses from the economics perspective of pervasive, incentive-based DR, and consider cases whether (1) DR is used to encourage consumers to decrease or increase their demand, and (2) utility companies have access to a single or multiple energy sources. We derive the necessary conditions and the optimal incentives to benefit from DR events.