Evaluating Government's Policies on Promoting Smart Metering Diffusion in Retail Electricity Markets via Agent‐Based Simulation^*

Abstract

In this paper, we develop an agent-based model of a market game in order to evaluate the effectiveness of the U.K. government's 2008-2010 policy on promoting smart metering in the U.K. retail electricity market. We break down the policy into four possible policy options. With the model, we study the impact of the four policy options on the dynamics of smart metering diffusion and suggest policy implications. The context of the paper is a practical application of agentbased simulation to the retail electricity market in the United Kingdom. The contributions of the paper are both in the areas of policymaking for the promotion of innovation diffusion in the electricity market and in methodological use of agent-based simulation for studying the impact of policies on the dynamics of innovation diffusion.

Agent-based simulation of innovation diffusion: a review

“…Finally, Zhang and Nuttall (2011) introduce a model that simulates the diffusion of smart electricity meters (a technology that offers consumers detailed information about energy consumption) in Great Britain as a function of different policy options. Consumers' decision making is formalized using theory of planned behavior.…”

“…Adoption decisions are therefore based on psychological rules rather than perfect rationality. For a comparison of the suitability of various social psychological theories for consumer agent design, we refer to Zhang and Nuttall (2011).…”

“…Schwarz and Ernst (2009) use TPB as a framework to model consumers' decisions to adopt or reject water-saving innovations using two different kinds of decision rules: a cognitively demanding deliberate decision rule and a very simple decision heuristic. Zhang and Nuttall (2011) model smart metering adoption behavior based on TPB.…”

Modelling electricity consumption in office buildings: An agent based approach

“…[19][20][21] and the theory of planned behaviour [e.g. 22,23]. In energy economics, Bunn and Oliveira [24] developed electricity market agents (i.e.…”

Assessing the Plurality of Actors and Policy Interactions: Agent-Based Modelling of Renewable Energy Market Integration

“…Recent publications have investigated the role of certain technologies, like the market diffusion of PV [31,32] and biomass power plants [33], or the value of storage technologies [34]. Others have put their focus on certain aspects of the demand side of the energy system, as this aspect is associated with a need for a more "human" modelling and preference depiction: their works focus on demand response [ [35][36][37], adoption of dynamic tariffs [38], price elasticities [39], and smart meter diffusion [40], among others. Another branch focuses on energy trading on the balancing market [41], the merit order effect [42], emission trading and investment decisions [43], and forecasting [44,45].…”