Incentivizing cooperative electricity-heat operation: A distributed asymmetric Nash bargaining mechanism

Weiye Zheng, Hao Lu and Jizhong Zhu

Energy, 2023, vol. 280, issue C

Abstract: Synergies in an integrated electricity and heat system (IEHS) are acknowledged to improve the overall economic efficiency. Due to heterogeneity in the IEHS, however, such cooperation can hardly be realized unless the resultant surplus is shared in an incentive-compatible and privacy-concerned way, which is seldom discussed by conventional holistic studies. To this end, a distributed asymmetric Nash bargaining (D-ANB) mechanism is designed. First, to cope with the uncertainties in the IEHS, a two-stage stochastic dispatch model is formulated. Then, the individual contribution rate is quantified in a subjective manner, while the favorable properties of the D-ANB mechanism are proved. Finally, to maintain the autonomy and privacy, both distributed formulation and distributed solution in D-ANB are introduced. Specifically, by exploiting the specific features of D-ANB, the efficiency of the alternating direction method of multipliers (ADMM) is significantly improved by introducing a warm-start strategy and deriving the closed-form solution of the bargaining subproblems. Case studies verify that D-ANB achieves both high computation efficiency with privacy preservation and Pareto optimality with fair surplus division. Both the electricity and heat sectors enjoy cost savings of around 10.5%–19.5%, while the coordination efficiency is enhanced by 3–4 orders of magnitude.

Keywords: Integrated electricity and heat system; Distributed optimization; Incentive mechanism; Asymmetric Nash bargaining (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:energy:v:280:y:2023:i:c:s0360544223014354

DOI: 10.1016/j.energy.2023.128041

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