Incentive-based demand response considering hierarchical electricity market: A Stackelberg game approach. (1st October 2017)

• Record Type: Journal Article
• Authors: Yu, Mengmeng; Hong, Seung Ho
• Is Part Of: Applied energy. Volume 203(2017)
• Page Start: 267
• Page End: 279
• Publication Date: 2017-10-01
• Subjects: Hierarchical market -- Incentive-based demand response -- Resource trading -- Smart grid -- Stackelberg game; Power (Mechanics) -- Periodicals; Energy conservation -- Periodicals; Energy conversion -- Periodicals; 621.042
• DOI: 10.1016/j.apenergy.2017.06.010
• Languages: English
• ISSNs: 0306-2619

Abstract

Highlights: Propose a resource trading framework for system-level dispatch of DR resources. Establish a two-loop Stackelberg game to capture the interactions between various actors. A unique Stackelberg equilibrium (SE) exists which provides optimal system solutions. Propose a distributed algorithm for seeking the SE without violating the privacy principle. Abstract: This paper proposes a novel incentive-based demand response model from the view of a grid operator to enable system-level dispatch of demand response resources. The model spans three hierarchical levels of a grid operator, multiple service providers, and corresponding customers. The grid operator first posts an incentive to service providers, who will then invoke sub-programs with enrolled customers to negotiate quantities of demand reduction via providing service provider incentives. In view of this hierarchical decision-making structure, a two-loop Stackelberg game is proposed to capture interactions between different actors. The existence of a unique Stackelberg equilibrium that provides optimal system solutions is demonstrated. Simulation results show that the proposed approach is effective in helping compensate system resource deficiency at minimum cost.