Social Shaping for Transactive Energy Systems

TL;DR

This paper addresses how to shape agent utility functions in transactive energy systems to ensure energy prices stay within socially acceptable limits, providing analytical solutions for specific utility forms.

Contribution

It introduces a set decision problem framework for social shaping in transactive energy systems and derives analytical bounds for utility parameters ensuring acceptable prices.

Findings

Set of agent preferences guaranteeing acceptable prices characterized by algebraic equations.

Analytical bounds established for linear-quadratic utility coefficients.

Proven conditions under which optimal pricing remains socially acceptable.

Abstract

This paper considers the problem of shaping agent utility functions in a transactive energy system to ensure the optimal energy price at a competitive equilibrium is always socially acceptable, that is, below a prescribed threshold. Agents in a distributed energy system aim to maximize their individual payoffs, as a combination of the utility of energy consumption and the income/expenditure from energy exchange. The utility function of each agent is parameterized by individual preference vectors, with the overall system operating at competitive equilibriums. We show the social shaping problem of the proposed transactive energy system is conceptually captured by a set decision problem. The set of agent preferences that guarantees a socially acceptable price is characterized by an implicit algebraic equation for strictly concave and continuously differentiable utility functions. We also present two analytical solutions where tight ranges for the coefficients of linear-quadratic utilities and piece-wise linear utilities are established under which optimal pricing is proven to be always socially acceptable.