AuthorsS. Maharjan, Q. Zhu, Y. Zhang, S. Gjessing and T. Basar
TitleDemand Response Management in the Smart Grid in a Large Population Regime
AfilliationCommunication Systems
Project(s)No Simula project
Publication TypeJournal Article
Year of Publication2016
JournalIEEE Transactions on Smart Grid
Date Published01/2016
KeywordsConsumer welfare, Demand response management, large population, profit optimization, Stackelberg game

In this paper we introduce a hierarchical system model that captures the decision making processes involved in a network of multiple providers and a large number of consumers in the smart grid, incorporating multiple processes from power generation to market activities and to power consumption. We establish a Stackelberg game between providers and end-users, where the providers behave as leaders maximizing their profit, and end-users act as followers maximizing their individual welfare. We obtain closed-form expressions for the Stackelberg equilibrium of the game and prove that a unique equilibrium solution exists. In the large population regime, we show that higher number of providers help improve profits for the providers. This is inline with the goal of facilitating multiple distributed power generation units, one of the main design considerations in the smart grid. We further prove that there exists a unique number of providers that maximize their profits, and develop an iterative and distributed algorithm to obtain it. Finally, we provide numerical examples to illustrate the solutions and to corroborate the results.

Citation Key23491