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Energies 2018, 11(9), 2315; https://doi.org/10.3390/en11092315

Game-Theory Modeling for Social Welfare Maximization in Smart Grids

1
Department of Wireless Communications Engineering, Kwangwoon University, Seoul 01897, Korea
2
Department of Electrical Engineering, Kwangwoon University, Seoul 01897, Korea
*
Author to whom correspondence should be addressed.
Received: 30 June 2018 / Revised: 11 August 2018 / Accepted: 14 August 2018 / Published: 3 September 2018
(This article belongs to the Section Electrical Power and Energy System)
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Abstract

In this paper, we study the Stackelberg game-based evolutionary game with two players, generators and energy users (EUs), for monetary profit maximization in real-time price (RTP) demand response (DR) systems. We propose two energy strategies, generator’s best-pricing and power-generation strategy and demand’s best electricity-usage strategy, which maximize the profit of generators and EUs, respectively, rather than maximizing the conventional unified profit of the generator and EUs. As a win–win strategy to reach the social-welfare maximization, the generators acquire the optimal power consumption calculated by the EUs, and the EUs obtain the optimal electricity price calculated by the generators to update their own energy parameters to achieve profit maximization over time, whenever the generators and the EUs execute their energy strategy in the proposed Stackelberg game structure. In the problem formulation, we newly formulate a generator profit function containing the additional parameter of the electricity usage of EUs to reflect the influence by the parameter. The simulation results show that the proposed energy strategies can effectively improve the profit of the generators to 45% compared to the beseline scheme, and reduce the electricity charge of the EUs by 15.6% on average. Furthermore, we confirmed the proposed algorithm can contribute to stabilization of power generation and peak-to-average ratio (PAR) reduction, which is one of the goals of DR. View Full-Text
Keywords: smart grid; game-theoretic modeling; social welfare maximization; Stackelberg game; pricing and power-generation strategy smart grid; game-theoretic modeling; social welfare maximization; Stackelberg game; pricing and power-generation strategy
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Hwang, Y.M.; Sim, I.; Sun, Y.G.; Lee, H.-J.; Kim, J.Y. Game-Theory Modeling for Social Welfare Maximization in Smart Grids. Energies 2018, 11, 2315.

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