Demand Management in the Smart Grid: An Information Processing Perspective

Driven by concerns regarding environmental sustainability, energy security, and economic growth, a fundamental transformation is taking hold in the electricity sector. Advanced communications technologies and information systems (IS) will play a central role in the realization of the ‘smart grid’, an intelligent and multi-directional electricity supply chain from generation to end-user consumption. IS embedded in the smart grid will provide opportunities for improved business practices such as dynamic, near real-time demand management, allowing a better utilization of existing electricity supply capacity and contributing to reductions in carbon emissions. Although opportunities exist, utilities face challenges adapting to the smart grid environment. Drawing on information processing theory, this paper develops a model of how IS can improve the effectiveness of electricity demand management. The model suggests practical implications for demand management performance of utilities and contributes to our understanding of the role information systems can play in achieving environmental sustainability.

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