Price Discrimination for Energy Trading in Smart Grid: A Game Theoretic Approach

Pricing schemes are an important smart grid feature to affect typical energy usage behavior of energy users (EUs). However, most existing schemes use the assumption that a buyer pays the same price per unit of energy to all suppliers at any particular time when energy is bought. By contrast, here a...

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Bibliographic Details
Published in:IEEE transactions on smart grid 2017-07, Vol.8 (4), p.1790-1801
Main Authors: Tushar, Wayes, Chau Yuen, Smith, David B., Poor, H. Vincent
Format: Article
Language:English
Subjects:
Australia
cake cutting game
Community participation
Cutting parameters
discriminate pricing
Discrimination
Energy consumption
Energy management
Free energy
Game theory
Games
Markets
Pareto optimality
Pricing
Real-time systems
Sensitivity
shared facility
Smart grid
Smart grids
social optimality
Suppliers
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Summary:Pricing schemes are an important smart grid feature to affect typical energy usage behavior of energy users (EUs). However, most existing schemes use the assumption that a buyer pays the same price per unit of energy to all suppliers at any particular time when energy is bought. By contrast, here a discriminate pricing technique using game theory is studied. A cake cutting game is investigated, in which participating EUs in a smart community decide on the price per unit of energy to charge a shared facility controller (SFC) in order to sell surplus energy. The focus is to study fairness criteria to maximize sum benefits to EUs and ensure an envy-free energy trading market. A benefit function is designed that leverages generation of discriminate pricing by each EU, according to the amount of surplus energy that an EU trades with the SFC and the EU's sensitivity to price. It is shown that the game possesses a socially optimal, and hence also Pareto optimal, solution. Further, an algorithm that can be implemented by each EU in a distributed manner to reach the optimal solution is proposed. Numerical case studies are given that demonstrate beneficial properties of the scheme.
ISSN:1949-3053
1949-3061
DOI:10.1109/TSG.2015.2508443