Managing Price Uncertainty in Prosumer-Centric Energy Trading: A Prospect-Theoretic Stackelberg Game Approach

In this paper, the problem of energy trading between smart grid prosumers, who can simultaneously consume and produce energy, and a grid power company is studied. The problem is formulated as a single-leader, multiple-follower Stackelberg game between the power company and multiple prosumers. In this game, the power company acts as a leader who determines the pricing strategy that maximizes its profits, while the prosumers act as followers who react by choosing the amount of energy to buy or sell so as to optimize their current and future profits. The proposed game accounts for each prosumer's subjective decision when faced with the uncertainty of profits, induced by the random future price. In particular, the framing effect, from the framework of prospect theory (PT), is used to account for each prosumer's valuation of its gains and losses with respect to an individual utility reference point. The reference point changes between prosumers and stems from their past experience and future aspirations of profits. The followers' noncooperative game is shown to admit a unique pure-strategy Nash equilibrium (NE) under classical game theory (CGT) which is obtained using a fully distributed algorithm. The results are extended to account for the case of PT using algorithmic solutions that can achieve an NE under certain conditions. Simulation results show that the total grid load varies significantly with the prosumers' reference point and their loss-aversion level. In addition, it is shown that the power company's profits considerably decrease when it fails to account for the prosumers' subjective perceptions under PT

An Energy Sharing Game with Generalized Demand Bidding: Model and Properties

This paper proposes a novel energy sharing mechanism for prosumers who can produce and consume. Different from most existing works, the role of individual prosumer as a seller or buyer in our model is endogenously determined. Several desirable properties of the proposed mechanism are proved based on a generalized game-theoretic model. We show that the Nash equilibrium exists and is the unique solution of an equivalent convex optimization problem. The sharing price at the Nash equilibrium equals to the average marginal disutility of all prosumers. We also prove that every prosumer has the incentive to participate in the sharing market, and prosumers' total cost decreases with increasing absolute value of price sensitivity. Furthermore, the Nash equilibrium approaches the social optimal as the number of prosumers grows, and competition can improve social welfare.Comment: 16 pages, 7 figure

Peer-to-Peer Energy Trading in Smart Residential Environment with User Behavioral Modeling

Electric power systems are transforming from a centralized unidirectional market to a decentralized open market. With this shift, the end-users have the possibility to actively participate in local energy exchanges, with or without the involvement of the main grid. Rapidly reducing prices for Renewable Energy Technologies (RETs), supported by their ease of installation and operation, with the facilitation of Electric Vehicles (EV) and Smart Grid (SG) technologies to make bidirectional flow of energy possible, has contributed to this changing landscape in the distribution side of the traditional power grid. Trading energy among users in a decentralized fashion has been referred to as Peer- to-Peer (P2P) Energy Trading, which has attracted significant attention from the research and industry communities in recent times. However, previous research has mostly focused on engineering aspects of P2P energy trading systems, often neglecting the central role of users in such systems. P2P trading mechanisms require active participation from users to decide factors such as selling prices, storing versus trading energy, and selection of energy sources among others. The complexity of these tasks, paired with the limited cognitive and time capabilities of human users, can result sub-optimal decisions or even abandonment of such systems if performance is not satisfactory. Therefore, it is of paramount importance for P2P energy trading systems to incorporate user behavioral modeling that captures users’ individual trading behaviors, preferences, and perceived utility in a realistic and accurate manner. Often, such user behavioral models are not known a priori in real-world settings, and therefore need to be learned online as the P2P system is operating. In this thesis, we design novel algorithms for P2P energy trading. By exploiting a variety of statistical, algorithmic, machine learning, and behavioral economics tools, we propose solutions that are able to jointly optimize the system performance while taking into account and learning realistic model of user behavior. The results in this dissertation has been published in IEEE Transactions on Green Communications and Networking 2021, Proceedings of IEEE Global Communication Conference 2022, Proceedings of IEEE Conference on Pervasive Computing and Communications 2023 and ACM Transactions on Evolutionary Learning and Optimization 2023

A review of prosumers’ behaviours in smart grids and importance of smart grid management

Purpose: The concept of the smart grid is relatively new. The first aim of the study is to understand the behaviour of prosumers in smart grids. The other goal is to raise awareness of the management tasks and risks of smart grids by highlighting the relevant issues of some business networks (PPP projects, outsourcing, strategic alliances etc.). Methodology: Systemized literature review was used in the paper. Results: The discussed management problems of various business networks indicate that management challenges can also be expected in smart grids, so it is worth preparing in time. Conclusion: We found a lack of empirical research about the behaviour of prosumers and believe that studying the electric power grid of the future from a management perspective, that is, examining the possible behaviours and decisions of various actors, can provide valuable and useful information for smart grid design and safe operation insurance

Understanding Deregulated Retail Electricity Markets in the Future: A Perspective from Machine Learning and Optimization

On top of Smart Grid technologies and new market mechanism design, the further deregulation of retail electricity market at distribution level will play a important role in promoting energy system transformation in a socioeconomic way. In today’s retail electricity market, customers have very limited ”energy choice,” or freedom to choose different types of energy services. Although the installation of distributed energy resources (DERs) has become prevalent in many regions, most customers and prosumers who have local energy generation and possible surplus can still only choose to trade with utility companies.They either purchase energy from or sell energy surplus back to the utilities directly while suffering from some price gap. The key to providing more energy trading freedom and open innovation in the retail electricity market is to develop new consumer-centric business models and possibly a localized energy trading platform. This dissertation is exactly pursuing these ideas and proposing a holistic localized electricity retail market to push the next-generation retail electricity market infrastructure to be a level playing field, where all customers have an equal opportunity to actively participate directly. This dissertation also studied and discussed opportunities of many emerging technologies, such as reinforcement learning and deep reinforcement learning, for intelligent energy system operation. Some improvement suggestion of the modeling framework and methodology are included as well.Ph.D.College of Engineering & Computer ScienceUniversity of Michigan-Dearbornhttps://deepblue.lib.umich.edu/bitstream/2027.42/145686/1/Tao Chen Final Dissertation.pdfDescription of Tao Chen Final Dissertation.pdf : Dissertatio

Towards Joint Electricity and Data Trading: A Scalable Cooperative Game Theoretic Approach

This paper, for the first time, proposes a joint electricity and data trading mechanism based on cooperative game theory. All prosumers first submit the parameters associated with both electricity and data to the market operator. The operator utilizes the public and prosumers' private data to forecast the distributed renewable generators (DRGs) and quantify the improvement driven by prosumers' private data in terms of reduced uncertainty set. Then, the operator maximizes the grand coalition's total payoff considering the uncertain generation of DRGs and imputes the payoff to each prosumer based on their contribution to electricity and data sharing. The mathematical formulation of the grand coalition is developed and converted into a second order cone programming problem by using an affinepolicy based robust approach. The stability of such a grand coalition is mathematically proved, i.e., all prosumers are willing to cooperate. Furthermore, to address the scalability challenge of existing payoff imputation methods in the cooperative game, a two stage optimization based approach is proposed, which is converted into a mixed integer second order cone programming and solved by the Benders decomposition. Case studies illustrate all prosumers are motivated to trade electricity and data under the joint trading framework and the proposed imputation method significantly enhances the scalability

Application of swarm intelligence algorithms to energy management of prosumers with wind power plants

The paper considers the problem of optimal control of a prosumer with a wind power plant in smart grid. It is shown that control can be performed in non-deterministic conditions due to the impossibility of accurate forecasting of the generation from renewable plants. A control model based on a priority queue of logical rules with structural-parametric optimization is applied. The optimization problem is considered from a separate prosumer, not from the entire distributed system. The solution of the optimization problem is performed by three swarm intelligence algorithms. Computational experiments were carried out for models of wind energy systems on Russky Island and Popov Island (Far East). The results obtained showed the high effectiveness of the swarm intelligence algorithms that demonstrated reliable and fast convergence to the global extreme of the optimization problem under different scenarios and parameters of prosumers. Also, we analyzed the influence of accumulator capacity on the variability of prosumers. The variability, in turn, affects the increase of the prosumer benefits from the interaction with the external global power system and neighboring prosumers