Competitive Energy Trading Framework for Demand-side Management in Neighborhood Area Networks

TL;DR

This paper compares three energy trading systems involving community energy storage and photovoltaic systems to determine the most effective demand-side management approach in neighborhood networks.

Contribution

It introduces a comprehensive analysis of competitive, benevolent, and cooperative CES models using game theory, highlighting the advantages of the fully-competitive CES framework.

Findings

Fully-competitive CES yields optimal revenue and user strategies.

Unique Stackelberg and Nash equilibria are identified.

Simulations demonstrate superior performance of the competitive model.

Abstract

This paper, by comparing three potential energy trading systems, studies the feasibility of integrating a community energy storage (CES) device with consumer-owned photovoltaic (PV) systems for demand-side management of a residential neighborhood area network. We consider a fully-competitive CES operator in a non-cooperative Stackelberg game, a benevolent CES operator that has socially favorable regulations with competitive users, and a centralized cooperative CES operator that minimizes the total community energy cost. The former two game-theoretic systems consider that the CES operator first maximizes their revenue by setting a price signal and trading energy with the grid. Then the users with PV panels play a non-cooperative repeated game following the actions of the CES operator to trade energy with the CES device and the grid to minimize energy costs. The centralized CES operator cooperates with the users to minimize the total community energy cost without appropriate incentives. The non-cooperative Stackelberg game with the fully-competitive CES operator has a unique Stackelberg equilibrium at which the CES operator maximizes revenue and users obtain unique Pareto-optimal Nash equilibrium CES energy trading strategies. Extensive simulations show that the fully-competitive CES model gives the best trade-off of operating environment between the CES operator and the users.