Integrated Demand Response for Microgrids with Incentive Compatible Bidding Mechanism

Abstract

Demand response (DR) are proved to be effective on reducing costs and increasing resilience for mircogrid. Load Reduction can be readily obtained from residents by many techniques such as Load Aggregator (LA) and Smart Appliances (SA). However, in practice, it is difficult to make a fair clearing mechanism for firms since different firms have different electricity preferences and valuation on their contributions to DR. To address the issues, with the implementation of incentive compatible bidding mechanism, this paper proposed a novel integration DR strategy for microgrid. To avoid disputes in the contribution clearing step, autonomous quotations based on electricity valuation were permitted. To ensure incentive compatibility, a unilateral double auction with trading priority were specifically adopted, and the fixed proportion model was also utilized to avoid imbalance of DR source in extreme cases. In addition, to address the destroyed incentive compatibility in extreme cases, Vickrey-Clarke-Groves (VCG) mechanism was implemented. For performance evaluating of the proposed strategy, a numerical case with super price anticipator was applied. The result of the simulation demonstrated that the proposed DR mechanism can effectively reduce the profit of price anticipator, maximize the social welfare of each component and control the overall cost in budget.