TY - JOUR
T1 - A Game-Theoretic Framework for Multiperiod-Multicompany Demand Response Management in the Smart Grid
AU - Alshehri, Khaled
AU - Liu, Ji
AU - Chen, Xudong
AU - Basar, Tamer
N1 - Funding Information:
Manuscript received July 24, 2019; revised February 1, 2020; accepted April 13, 2020. Date of publication May 6, 2020; date of current version April 12, 2021. Manuscript received in final form April 17, 2020. This work was supported in part by the U.S. Air Force Office of Scientific Research (AFOSR) MURI under Grant FA9550-10-1-0573 and in part by the AFOSR under Grant FA9550-19-1-0353. The work of Khaled Alshehri was supported by the King Fahd University of Petroleum and Minerals (KFUPM). Recommended by Associate Editor J. H. Braslavsky. (Corresponding author: Khaled Alshehri.) Khaled Alshehri is with the Systems Engineering Department, King Fahd University of Petroleum and Minerals, Dhahran 31261, Saudi Arabia (e-mail: kalshehri@kfupm.edu.sa).
Publisher Copyright:
© 1993-2012 IEEE.
PY - 2021/5
Y1 - 2021/5
N2 - By utilizing tools from the game theory, we develop a novel multiperiod-multicompany demand response framework considering the interactions between companies (sellers of energy) and their consumers (buyers of energy). We model the interactions in terms of a Stackelberg game, where companies set their prices and consumers respond by choosing their demands. We show that the underlying game has a unique equilibrium at which the companies maximize their revenues, while the consumers maximize their utilities subject to their local constraints. Closed-form expressions are provided for the optimal strategies of all players. Based on these solutions, a power-allocation game has been formulated, which is shown to admit a unique pure-strategy Nash equilibrium, for which closed-form expressions are also provided. This equilibrium is found under the assumption that companies can freely allocate their power across the time horizon, but we also demonstrate that it is possible to relax this assumption. We further provide a fast distributed algorithm for the computation of all optimal strategies using only local information. We also study the effect of variations in the number of periods (subdivisions of the time horizon) and the number of consumers. As a consequence, we are able to find an appropriate company-to-consumer ratio when the number of consumers participating in demand response exceeds some threshold. Furthermore, we show, both analytically and numerically, that the multiperiod scheme provides incentives for energy consumers to participate in demand response compared with the single-period framework studied by Maharjan et al. In our framework, we provide a condition for the minimum budget consumers need and carry out case studies using real-life data to demonstrate the benefits of the approach, which show potential savings of up to 30% and equilibrium prices that have low volatility.
AB - By utilizing tools from the game theory, we develop a novel multiperiod-multicompany demand response framework considering the interactions between companies (sellers of energy) and their consumers (buyers of energy). We model the interactions in terms of a Stackelberg game, where companies set their prices and consumers respond by choosing their demands. We show that the underlying game has a unique equilibrium at which the companies maximize their revenues, while the consumers maximize their utilities subject to their local constraints. Closed-form expressions are provided for the optimal strategies of all players. Based on these solutions, a power-allocation game has been formulated, which is shown to admit a unique pure-strategy Nash equilibrium, for which closed-form expressions are also provided. This equilibrium is found under the assumption that companies can freely allocate their power across the time horizon, but we also demonstrate that it is possible to relax this assumption. We further provide a fast distributed algorithm for the computation of all optimal strategies using only local information. We also study the effect of variations in the number of periods (subdivisions of the time horizon) and the number of consumers. As a consequence, we are able to find an appropriate company-to-consumer ratio when the number of consumers participating in demand response exceeds some threshold. Furthermore, we show, both analytically and numerically, that the multiperiod scheme provides incentives for energy consumers to participate in demand response compared with the single-period framework studied by Maharjan et al. In our framework, we provide a condition for the minimum budget consumers need and carry out case studies using real-life data to demonstrate the benefits of the approach, which show potential savings of up to 30% and equilibrium prices that have low volatility.
KW - Demand-side management (DSM)
KW - power system economics
KW - smart grids
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UR - http://www.scopus.com/inward/citedby.url?scp=85085965975&partnerID=8YFLogxK
U2 - 10.1109/TCST.2020.2989272
DO - 10.1109/TCST.2020.2989272
M3 - Article
AN - SCOPUS:85085965975
VL - 29
SP - 1019
EP - 1034
JO - IEEE Transactions on Control Systems Technology
JF - IEEE Transactions on Control Systems Technology
SN - 1063-6536
IS - 3
M1 - 9086902
ER -