Journal
IEEE TRANSACTIONS ON SMART GRID
Volume 7, Issue 6, Pages 2604-2614Publisher
IEEE-INST ELECTRICAL ELECTRONICS ENGINEERS INC
DOI: 10.1109/TSG.2015.2483522
Keywords
Demand-side management (DSM); game theory; prospect theory (PT); smart grid
Categories
Funding
- U.S. National Science Foundation [CNS-1446621, ECCS-1549894, ECCS-1549900, ECCS-1549881, NSFC-61232016]
- National Research Foundation of Korea [21A20131612192] Funding Source: Korea Institute of Science & Technology Information (KISTI), National Science & Technology Information Service (NTIS)
- Div Of Electrical, Commun & Cyber Sys
- Directorate For Engineering [1549881] Funding Source: National Science Foundation
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Demand-side management (DSM) has emerged as an important smart grid feature that allows utility companies to maintain desirable grid loads. However, the success of DSM is contingent on active customer participation. Indeed, most existing DSM studies are based on game-theoretic models that assume customers will act rationally and will voluntarily participate in DSM. In contrast, in this paper, the impact of customers' subjective behavior on each other's DSM decisions is explicitly accounted for. In particular, a noncooperative game is formulated between grid customers in which each customer can decide on whether to participate in DSM or not. In this game, customers seek to minimize a cost function that reflects their total payment for electricity. Unlike classical game-theoretic DSM studies, which assume that customers are rational in their decision-making, a novel approach is proposed based on the framework of prospect theory (PT) to explicitly incorporate the impact of customer behavior on DSM decisions. To solve the proposed game under both conventional game theory and PT, a new algorithm based on fictitious play is proposed using which the game will reach an epsilon-mixed Nash equilibrium. Simulation results are provided to assess the impact of customer behavior on DSM. In particular, the overall participation level and grid load can depend significantly on the rationality level of the players and their risk aversion tendencies.
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