Game theoretical-based demand response modeling considering industrial customers

Abstract

In this paper, a novel incentive-based demand response (DR) model is established from the perspective of a grid operator (GO), over which industrial customers are regarded as active players in the intra-day market to help lower the cost for compensating system resource deficiency in the form of load reductions. By leveraging a GO incentive, the interactions between the GO and industrial consumers are studied using Stackelberg game theory, and a unique Stackelberg equilibrium (SE) is proven to exist in the game, which yields the optimal resource trading outcome, composed of the optimal GO incentive value and load reduction quantities procured from each industrial customer. Numerical analyses showed that the proposed approach is effective in minimizing the total cost for compensating system resource deficiency.