Transforming Energy Networks via Peer to Peer Energy Trading: Potential of Game Theoretic Approaches

Peer-to-peer (P2P) energy trading has emerged as a next-generation energy management mechanism for the smart grid that enables each prosumer of the network to participate in energy trading with one another and the grid. This poses a significant challenge in terms of modeling the decision-making process of each participant with conflicting interest and motivating prosumers to participate in energy trading and to cooperate, if necessary, for achieving different energy management goals. Therefore, such decision-making process needs to be built on solid mathematical and signal processing tools that can ensure an efficient operation of the smart grid. This paper provides an overview of the use of game theoretic approaches for P2P energy trading as a feasible and effective means of energy management. As such, we discuss various games and auction theoretic approaches by following a systematic classification to provide information on the importance of game theory for smart energy research. Then, the paper focuses on the P2P energy trading describing its key features and giving an introduction to an existing P2P testbed. Further, the paper zooms into the detail of some specific game and auction theoretic models that have recently been used in P2P energy trading and discusses some important finding of these schemes.Comment: 38 pages, single column, double spac

Feasibility of Using Discriminate Pricing Schemes for Energy Trading in Smart Grid

This paper investigates the feasibility of using a discriminate pricing scheme to offset the inconvenience that is experienced by an energy user (EU) in trading its energy with an energy controller in smart grid. The main objective is to encourage EUs with small distributed energy resources (DERs), or with high sensitivity to their inconvenience, to take part in the energy trading via providing incentive to them with relatively higher payment at the same time as reducing the total cost to the energy controller. The proposed scheme is modeled through a two-stage Stackelberg game that describes the energy trading between a shared facility authority (SFA) and EUs in a smart community. A suitable cost function is proposed for the SFA to leverage the generation of discriminate pricing according to the inconvenience experienced by each EU. It is shown that the game has a unique sub-game perfect equilibrium (SPE), under the certain condition at which the SFA's total cost is minimized, and that each EU receives its best utility according to its associated inconvenience for the given price. A backward induction technique is used to derive a closed form expression for the price function at SPE, and thus the dependency of price on an EU's different decision parameters is explained for the studied system. Numerical examples are provided to show the beneficial properties of the proposed scheme.Comment: 7 pages, 4 figures, 3 tables, conference pape

A Stackelberg Game for Multi-Period Demand Response Management in the Smart Grid

This paper studies a multi-period demand response management problem in the smart grid where multiple utility companies compete among themselves. The user-utility interactions are modeled by a noncooperative game of a Stackelberg type where the interactions among the utility companies are captured through a Nash equilibrium. It is shown that this game has a unique Stackelberg equilibrium at which the utility companies set prices to maximize their revenues (within a Nash game) while the users respond accordingly to maximize their utilities subject to their budget constraints. Closed-form expressions are provided for the corresponding strategies of the users and the utility companies. It is shown that the multi- period scheme, compared with the single-period case, provides more incentives for the users to participate in the game. A necessary and sufficient condition on the minimum budget needed for a user to participate is provided.Comment: Accepted for Proc. 54th IEEE Conference on Decision and Contro