Integrating Energy Storage into the Smart Grid: A Prospect Theoretic Approach

In this paper, the interactions and energy exchange decisions of a number of geographically distributed storage units are studied under decision-making involving end-users. In particular, a noncooperative game is formulated between customer-owned storage units where each storage unit's owner can decide on whether to charge or discharge energy with a given probability so as to maximize a utility that reflects the tradeoff between the monetary transactions from charging/discharging and the penalty from power regulation. Unlike existing game-theoretic works which assume that players make their decisions rationally and objectively, we use the new framework of prospect theory (PT) to explicitly incorporate the users' subjective perceptions of their expected utilities. For the two-player game, we show the existence of a proper mixed Nash equilibrium for both the standard game-theoretic case and the case with PT considerations. Simulation results show that incorporating user behavior via PT reveals several important insights into load management as well as economics of energy storage usage. For instance, the results show that deviations from conventional game theory, as predicted by PT, can lead to undesirable grid loads and revenues thus requiring the power company to revisit its pricing schemes and the customers to reassess their energy storage usage choices.Comment: 5 pages, 4 figures, conferenc

Energy Management in Microgrids: A Combination of Game Theory and Big Data‐Based Wind Power Forecasting

Energy internet provides an open framework for integrating every piece of equipment involved in energy generation, transmission, transformation, distribution, and consumption with novel information and communication technologies. In this chapter, the authors adopt a combination of game theory and big data to address the coordinated management of renewable and traditional energy, which is a typical issue on energy interconnections. The authors formulate the energy management problem as a three‐stage Stackelberg game and employ the backward induction method to derive the closed‐form expressions of the optimal strategies. Next, we study the big data‐based power generation forecasting techniques and introduce a scheme of the wind power forecasting, which can assist the microgrid to make strategies. Simulation results show that more accurate prediction results of wind power are conducive to better energy management

A Game-Theoretic Approach to Energy Trading in the Smart Grid

Electric storage units constitute a key element in the emerging smart grid system. In this paper, the interactions and energy trading decisions of a number of geographically distributed storage units are studied using a novel framework based on game theory. In particular, a noncooperative game is formulated between storage units, such as PHEVs, or an array of batteries that are trading their stored energy. Here, each storage unit's owner can decide on the maximum amount of energy to sell in a local market so as to maximize a utility that reflects the tradeoff between the revenues from energy trading and the accompanying costs. Then in this energy exchange market between the storage units and the smart grid elements, the price at which energy is traded is determined via an auction mechanism. The game is shown to admit at least one Nash equilibrium and a novel proposed algorithm that is guaranteed to reach such an equilibrium point is proposed. Simulation results show that the proposed approach yields significant performance improvements, in terms of the average utility per storage unit, reaching up to 130.2% compared to a conventional greedy approach.Comment: 11 pages, 11 figures, journa

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