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Energies 2017, 10(9), 1342; doi:10.3390/en10091342

Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy Sources

1
School of Electrical Engineering, Korea Advanced Institute of Science and Technology (KAIST), 34051 Daejeon, Korea
2
Department of Software, Gachon University, Seongnam 13120, Korea;
*
Author to whom correspondence should be addressed.
Received: 30 June 2017 / Revised: 26 August 2017 / Accepted: 1 September 2017 / Published: 5 September 2017
(This article belongs to the Special Issue Energy Management Control)
View Full-Text   |   Download PDF [412 KB, uploaded 6 September 2017]   |  

Abstract

This study investigates a demand-side management problem in which multiple suppliers compete with each other to maximize their own revenue. We consider that suppliers have heterogeneous energy sources and individually set the unit price of each energy source. Then, consumers that share a net utility react to the suppliers’ decisions on prices by deciding the amount of energy to request, or how to split the consumers’ aggregated demand over multiple suppliers. In this case, the consumers need to consider the power loss and the price to pay for procuring electricity. We analyze the economic benefits of such a pricing competition among suppliers (e.g., a demand-side management that considers consumers’ reaction). This is achieved by designing a hierarchical decision-making scheme as a multileader–multifollower Stackelberg game. We show that the behaviors of both consumers and suppliers based on well-designed utility functions converge to a unique equilibrium solution. This allows them to maximize the payoff from all participating consumers and suppliers. Accordingly, closed-form expressions are provided for the corresponding strategies of the consumers and the suppliers. Finally, we provide numerical examples to illustrate the effectiveness of the solutions. This game-theoretic study provides an example of incentives and insight for demand-side management in future power grids. View Full-Text
Keywords: demand-side management; pricing mechanism; stackelberg game; equilibrium analysis; heterogeneous energy sources demand-side management; pricing mechanism; stackelberg game; equilibrium analysis; heterogeneous energy sources
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This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Han, K.; Lee, J.; Choi, J. Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy Sources. Energies 2017, 10, 1342.

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