A Coalitional Game for Demand-Side Management in a Low-Voltage Resistive Micro-Grid with Multiple Electricity Retailers

TL;DR

This paper introduces a novel demand-side management approach using coalitional game theory in a micro-grid with multiple retailers, optimizing pricing and coalition stability while analyzing physical and market responses.

Contribution

It develops a hierarchical pricing scheme based on coalitional game theory, including a coalition formation algorithm and stability analysis within a resistive micro-grid context.

Findings

The proposed scheme converges to a steady-state equilibrium.

Coalitions improve retailer profits compared to traditional single retailer schemes.

The integrated model links market dynamics with physical grid responses.

Abstract

An existing challenge in power systems is the implementation of optimal demand management through dynamic pricing. This paper encompasses the design, analysis and implementation of a novel on-line pricing scheme based on coalitional game theory. The setting consists of a network with multiple energy retailers competing to attract consumers by announcing a price in a hierarchical leader-follower structure. The process of coalition formation under such a pricing scheme can be viewed as a game for which we show that a Stackelberg equilibrium exists, \ie given a price, consumers will respond by conforming to a reciprocal power consumption quantity. We propose a coalition formation algorithm and perform a game-theoretic stability analysis on the resulting coalitions. We integrate the pricing setting with a resistive micro-grid dynamic model. In this context we analyse the behaviour of the integrated system, bridging the gap between market and physical layers of the problem. Simulations provide a comparison of profits generated by the proposed scheme against a more traditional single retailer scheme, while simultaneously showing convergence towards a steady-state equilibrium. Additionally, we shed light into the system's physical response when subject to our proposed pricing scheme.