Mechanism Design for Demand Management in Energy Communities

Xupeng Wei and Achilleas Anastasopoulos
Additional contact information
Xupeng Wei: Electrical Engineering and Computer Sciences Department, University of Michigan, Ann Arbor, MI 48109-2122, USA
Achilleas Anastasopoulos: Electrical Engineering and Computer Sciences Department, University of Michigan, Ann Arbor, MI 48109-2122, USA

Games, 2021, vol. 12, issue 3, 1-34

Abstract: We consider a demand management problem in an energy community, in which several users obtain energy from an external organization such as an energy company and pay for the energy according to pre-specified prices that consist of a time-dependent price per unit of energy as well as a separate price for peak demand. Since users’ utilities are their private information, which they may not be willing to share, a mediator, known as the planner, is introduced to help optimize the overall satisfaction of the community (total utility minus total payments) by mechanism design. A mechanism consists of a message space, a tax/subsidy, and an allocation function for each user. Each user reports a message chosen from her own message space, then receives some amount of energy determined by the allocation function, and pays the tax specified by the tax function. A desirable mechanism induces a game, the Nash equilibria (NE), of which results in an allocation that coincides with the optimal allocation for the community. As a starting point, we design a mechanism for the energy community with desirable properties such as full implementation, strong budget balance and individual rationality for both users and the planner. We then modify this baseline mechanism for communities where message exchanges are allowed only within neighborhoods, and consequently, the tax/subsidy and allocation functions of each user are only determined by the messages from their neighbors. All of the desirable properties of the baseline mechanism are preserved in the distributed mechanism. Finally, we present a learning algorithm for the baseline mechanism, based on projected gradient descent, that is guaranteed to converge to the NE of the induced game.

Keywords: mechanism design; Nash equilibrium; demand management; energy networks; learning in games (search for similar items in EconPapers)
JEL-codes: C C7 C70 C71 C72 C73 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2073-4336/12/3/61/pdf (application/pdf)
https://www.mdpi.com/2073-4336/12/3/61/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jgames:v:12:y:2021:i:3:p:61-:d:606076

Access Statistics for this article

Games is currently edited by Ms. Susie Huang

More articles in Games from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().