Demand Side Management in the Smart Grid: an Efficiency and Fairness Tradeoff

TL;DR

This paper compares two Demand Side Management mechanisms in the smart grid, analyzing their efficiency and fairness tradeoffs through theoretical proofs and real data simulations, highlighting the advantages of game-theoretic approaches.

Contribution

It provides a theoretical analysis and numerical evaluation of two DSM mechanisms, demonstrating their efficiency, fairness, and ability to avoid synchronization effects.

Findings

The hourly mechanism achieves near social optimality (0.1% deviation).

The hourly mechanism exhibits significant fairness improvements.

Both mechanisms prevent synchronization effects seen in non-game theoretic methods.

Abstract

We compare two Demand Side Management (DSM) mechanisms, introduced respectively by Mohsenian-Rad et al (2010) and Baharlouei et al (2012), in terms of efficiency and fairness. Each mechanism defines a game where the consumers optimize their flexible consumption to reduce their electricity bills. Mohsenian-Rad et al propose a daily mechanism for which they prove the social optimality. Baharlouei et al propose a hourly billing mechanism for which we give theoretical results: we prove the uniqueness of an equilibrium in the associated game and give an upper bound on its price of anarchy. We evaluate numerically the two mechanisms, using real consumption data from Pecan Street Inc. The simulations show that the equilibrium reached with the hourly mechanism is socially optimal up to 0.1%, and that it achieves an important fairness property according to a quantitative indicator we define. We observe that the two DSM mechanisms avoid the synchronization effect induced by non- game theoretic mechanisms, e.g. Peak/OffPeak hours contracts.