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Incentives-Based Mechanism for Efficient Demand Response Programs
In this work we investigate the inefficiency of the electricity system with
strategic agents. Specifically, we prove that without a proper control the
total demand of an inefficient system is at most twice the total demand of the
optimal outcome. We propose an incentives scheme that promotes optimal outcomes
in the inefficient electricity market. The economic incentives can be seen as
an indirect revelation mechanism that allocates resources using a
one-dimensional message space per resource to be allocated. The mechanism does
not request private information from users and is valid for any concave
customer's valuation function. We propose a distributed implementation of the
mechanism using population games and evaluate the performance of four popular
dynamics methods in terms of the cost to implement the mechanism. We find that
the achievement of efficiency in strategic environments might be achieved at a
cost, which is dependent on both the users' preferences and the dynamic
evolution of the system. Some simulation results illustrate the ideas presented
throughout the paper.Comment: 38 pages, 9 figures, submitted to journa
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