Game-Theory Modeling for Social Welfare Maximization in Smart Grids

Yu Min Hwang, Issac Sim, Young Ghyu Sun, Heung-Jae Lee and Jin Young Kim
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Yu Min Hwang: Department of Wireless Communications Engineering, Kwangwoon University, Seoul 01897, Korea
Issac Sim: Department of Wireless Communications Engineering, Kwangwoon University, Seoul 01897, Korea
Young Ghyu Sun: Department of Wireless Communications Engineering, Kwangwoon University, Seoul 01897, Korea
Heung-Jae Lee: Department of Electrical Engineering, Kwangwoon University, Seoul 01897, Korea
Jin Young Kim: Department of Wireless Communications Engineering, Kwangwoon University, Seoul 01897, Korea

Energies, 2018, vol. 11, issue 9, 1-23

Abstract: In this paper, we study the Stackelberg game-based evolutionary game with two players, generators and energy users (EUs), for monetary profit maximization in real-time price (RTP) demand response (DR) systems. We propose two energy strategies, generator’s best-pricing and power-generation strategy and demand’s best electricity-usage strategy, which maximize the profit of generators and EUs, respectively, rather than maximizing the conventional unified profit of the generator and EUs. As a win–win strategy to reach the social-welfare maximization, the generators acquire the optimal power consumption calculated by the EUs, and the EUs obtain the optimal electricity price calculated by the generators to update their own energy parameters to achieve profit maximization over time, whenever the generators and the EUs execute their energy strategy in the proposed Stackelberg game structure. In the problem formulation, we newly formulate a generator profit function containing the additional parameter of the electricity usage of EUs to reflect the influence by the parameter. The simulation results show that the proposed energy strategies can effectively improve the profit of the generators to 45% compared to the beseline scheme, and reduce the electricity charge of the EUs by 15.6% on average. Furthermore, we confirmed the proposed algorithm can contribute to stabilization of power generation and peak-to-average ratio (PAR) reduction, which is one of the goals of DR.

Keywords: smart grid; game-theoretic modeling; social welfare maximization; Stackelberg game; pricing and power-generation strategy (search for similar items in EconPapers)
JEL-codes: Q Q0 Q4 Q40 Q41 Q42 Q43 Q47 Q48 Q49 (search for similar items in EconPapers)
Date: 2018
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (5)

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