Smart Meter Time Varying Pricing Can Lead to “Catastrophic Consequences” for the Grid

by K.T. Weaver, SkyVision Solutions

Catastrophic Smart Meter SynchronizationA new study has been released based upon research at Bremen University that reveals that the use of time varying rates implemented through the mass deployment of smart meters can lead to consumer demand avalanches resulting in smart grid blackouts.

The study has the somewhat long title name of, “Econophysics of adaptive power markets:  When a market does not dampen fluctuations but amplifies them.”

Using what is called an “adaptive pricing strategy,” smart grid proponents have advertised that daily fluctuations in demand for electricity could be reduced by subjecting consumers to time varying rates, effectively forcing them to change behavior to levelize the overall electric grid load profile.  For example, it is suggested that consumers perform laundry at such times as midnight to 2 am in the morning in order to reduce peak demand during the day.  Smart grid proponents further advertise this behavior modification as a “benefit” to the consumer since electricity rates would be lower at midnight as compared to mid-day when people would otherwise not be sleeping.

Despite the propaganda nature of the message that it is a “benefit” for the consumer to perform laundry activities in the middle of the night, it was founded on the somewhat intuitive notion that the consumer behavioral modification would have a desirable effect on smart grid operations.  The latest study results shed doubt on whether this strategy will actually work.  As the title of the study suggests, adaptive pricing will likely lead to the exact opposite effect:  rather than dampen the electric grid fluctuations, it will amplify them.

“Our work examines the, at first sight, great idea to use smart electricity meters to dampen fluctuations in the electricity power nets,” Stefan Bornholdt at the University of Bremen told  “However, we find that under some conditions, consumers with such meters start competing and create a new artificial market which exhibits properties of real markets, such as bubbles and crashes.  Thus, instead of dampening out fluctuations, it may create new ones.  In this way, interacting smart meters may generate chaos instead of stability.”

When consumers temporarily postpone household activities requiring the use of electricity and then the fluctuating price drops from higher levels, those consumers will join a so-called “happy hour” of cheap electricity, leading to an avalanche of demand.  The new econophysics model used in the study shows that this coordinated “happy hour” behavior may in turn lead to “catastrophic synchronization” in which the actual demand differs by several orders of magnitude from the average amount predicted by a standard economic model.

Demand over Time

To provide additional insight on the significance of the newly released study results, a few select quotations from the article are reproduced below:

“small price changes may translate to large load fluctuations through catastrophic consumer synchronization.  As a result, an adaptive power market may cause the opposite effect than intended:  Power demand fluctuations are not dampened but amplified instead.” 

“the actions of consumers may self-organize on the time axis, with catastrophic synchronization as a possible result.” 

“The market, instead of acting like a low pass filter that dampens fluctuations, turns into a generator for catastrophic time series.” 

“While these are results from a statistical physics-inspired toy model for an electricity power market with fluctuating energy sources and an adaptive pricing scheme, they may provide a lesson for real markets as well.  In particular, they seem to indicate that, at first sight, [the] brilliant idea to use market mechanisms as a low-pass filter for fluctuating electricity sources (e.g., by communicating price information to consumers through the so-called smart meters) may not only break down under certain conditions[, but] more importantly, they also can lead to catastrophic consequences when … consumers do not act statistically independently.” 

According to the conclusions of the Bremen University research team, the massive deployment of smart meters is a scheme that “has not been thought out thoroughly.”  The model used in the study reproduced with various variables what real humans would logically do in situations using time varying pricing.  In such situations, the individual does not know which consequences arise from his or her actions if it is multiplied.  Unfortunately those who supply the energy do not know either.

As has been previously stated at this website, ‘Smart’ Meters Have Failed and Were a Dumb Investment.  With the latest study results, the evidence continues to mount.

Source Material for this Article 

“Econophysics of adaptive power markets: When a market does not dampen fluctuations but amplifies them,” Physical Review; 92, 012815 (2015); DOI: 10.1103/PhysRevE.92.012815 and

“A seemingly obvious way to make the electricity market better may actually make it worse,” at

“Smart meters can jeopardize grid reliability,” at

“Smart meters can destabilize grid, study says,” at

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About SkyVision Solutions

Raising public awareness and finding solutions for smart grid issues related to invasions of privacy, data security, cyber threats, health and societal impacts, as well as hazards related to radiofrequency (RF) radiation emissions from all wireless devices, including smart meters.
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