A novel method of market segmentation and market study for dynamic pricing of retail electricity in India: an experimental approach in a university setup

Abstract

Dynamic pricing with automation and option to sell in-house-generated renewable energy to the grid attract consumers to the future retail electricity market. Real-time pricing of electricity in the Indian context has not been relevant so far because the pricing in Indian urban retail electricity market is mostly restricted to block-rate pricing. This study describes a novel method for segmenting the retail electricity market in a university setup. The experiment was focused on differential pricing, and the data were collected from 173 respondents using a questionnaire. This study prescribes different criteria for classifying a consumer into the specified market segments using cluster analysis and discriminant analysis. The demand–price relationship and price elasticity are studied for each segment. Demand characteristics of four appliances are also discussed. The study found that in some cases, consumers’ willingness to pay is about five times higher than the present average price.