Energy Management Based on Demand-Side Pricing: A Supermodular Game Approach

Abstract

This paper proposes a pricing strategy for energy management in the electricity market composed of one generation company, multiple competing utility companies, and consumers with heating, ventilation, and air conditionings, which participate in demand response to keep the electricity real-time balance. The utility company plays the role of an intermediary agent between the generation company and consumers. We model the cost of the utility companies from the demand-side regulation and give the condition of a unique optimal regulation price. For the multiple competing utility companies, we demonstrate that the retail pricing game belongs to the supermodular game and the game exists a pure Nash equilibrium. The uniqueness of the Nash equilibrium is also proved, and then a distributed algorithm is developed to search for the optimal equilibrium price. Furthermore, we study the influence of the wholesale price on the equilibrium. Finally, numerical results demonstrate the efficiency of the proposed pricing strategy.

Keywords

• Energy management
• distributed algorithm
• Nash equilibrium
• pricing strategy
• supermodular game