EMP S2E20. USC academics Matthew Kahn and Bhaskar Krishnamachari discuss the potential for smart grids and dynamic pricing to address climate emissions and reduce energy demand.

Researchers Matthew Kahn and Bhaskar Krishnamachari, respectively an economist and electrical engineer at the University of Southern California, discuss their recent commentary calling for greater dynamic pricing in the electric industry. By reducing peak electricity demand, more responsive demand can eliminate the need for new fossil-fuel power plants and help reduce climate-altering and other harmful emissions. They look to "experimentation" with opt-in, voluntary demand-response programs that expose electricity consumers to varying power prices to analyze and determine what best motivates them to conserve energy. They urge that Inflation Reduction Act clean-energy funding be directed to develop effective demand-response programs for all consumers, not just large industrial and commercial customers with the greatest economic incentive to reduce energy use. Artificial intelligence and machine learning tools can be developed that automatically respond to price signals on behalf of "Average Joe" electricity consumers, making decisions in response to price signals based on the wants and desires and needs of the individual customer, they say, and they urge that demand-response programs be designed with lower-income households in mind.