Demand–supply equilibrium in deregulated electricity markets for future smartgrid

Abstract

Deregulation of electricity market has a potential to improve efficiency, reduce costs for both customers and utilities and improve customer services if implemented correctly. However, it also introduces variability of both demand and supply. For grid stability and reliability, supply and demand must be matched at all times. In this work, the deregulated electricity market has been modeled in a game-theoretic manner as a Potluck problem with non-rational learning, in order to achieve demand–supply equilibrium on an hourly basis. In this work, an algorithm that uses past demand-supply patterns to establish current ones, in a non-rational learning manner has been proposed. Hourly supply and demand data for Danish electricity market from March to June 2016 were used to test the algorithm. Four utilities were simulated as producers and consumers of electricity, each using past 10 days data, in each iteration to determine current supply and demand. It has been observed that an equilibrium position can be established after 12 iterations and hence reduce supply–demand variability. Scheduling algorithms can be used together with the proposed algorithm to manage demand at peak hours by encouraging customers to consume more during off-peak hours and less during peak hour and thereby reducing cost for both customers and utilities.

Keywords

• deregulated electricity market
• smart grid
• demand–supply variability
• potluck problem