Designing pricing strategies for coordination of networked distributed energy resources

We study the problem of aggregator's mechanism design for controlling the amount of active, or reactive, power provided, or consumed, by a group of distributed energy resources (DERs). The aggregator interacts with the wholesale electricity market and through some market-clearing mechanism is incentivized to provide (or consume) a certain amount of active (or reactive) power over some period of time, for which it will be compensated. The objective is for the aggregator to design a pricing strategy for incentivizing DERs to modify their active (or reactive) power consumptions (or productions) so that they collectively provide the amount that the aggregator has agreed to provide. The aggregator and DERs' strategic decision-making process can be cast as a Stackelberg game, in which aggregator acts as the leader and the DERs are the followers. In previous work [Gharesifard et al., 2013b, a], we have introduced a framework in which each DER uses the pricing information provided by the aggregator and some estimate of the average energy that neighboring DERs can provide to compute a Nash equilibrium solution in a distributed manner. Here, we focus on the interplay between the aggregator's decision-making process and the DERs' decision-making process. In particular, we propose a simple feedback-based privacy-preserving pricing control strategy that allows the aggregator to coordinate the DERs so that they collectively provide the amount of active (or reactive) power agreed upon, provided that there is enough capacity available among the DERs. We provide a formal analysis of the stability of the resulting closed-loop system. We also discuss the shortcomings of the proposed pricing strategy, and propose some avenues of future work. We illustrate the proposed strategy via numerical simulations.