Journal
IEEE TRANSACTIONS ON POWER SYSTEMS
Volume 28, Issue 2, Pages 884-892Publisher
IEEE-INST ELECTRICAL ELECTRONICS ENGINEERS INC
DOI: 10.1109/TPWRS.2012.2207134
Keywords
Electricity price; game theory; optimization; smart grid; time-of-use
Categories
Funding
- Department of Defense under the AFOSR Grant [FA9550-11-1-0210]
- National Science Foundation [CCF-1014908, CCF-0963742]
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Demand for electricity varies throughout the day, increasing the average cost of power supply. Time-of-use (TOU) pricing has been proposed as a demand-side management (DSM) method to influence user demands. In this paper, we describe a game-theoretic approach to optimize TOU pricing strategies (GT-TOU). We propose models of costs to utility companies arising from user demand fluctuations, and models of user satisfaction with the difference between the nominal demand and the actual consumption. We design utility functions for the company and the users, and obtain a Nash equilibrium using backward induction. In addition to a single-user-type scenario, we also consider a scenario with multiple types of users, each of whom responds differently to time-dependent prices. Numerical examples show that our method is effective in leveling the user demand by setting optimal TOU prices, potentially decreasing costs for the utility companies, and increasing user benefits. An increase in social welfare measure indicates improved market efficiency through TOU pricing.
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