A game theory approach to demand side management in smart grids

Abstract

With the increase in global energy awareness, smart grids improve the efficiency and peak leveling of power systems. Demand side management is the controlling scheme in such grids and it aims to optimize several characteristics using an interactive dynamic pricing scheme. In this paper we propose a game theoretic approach to the demand side management where several subscribers share one common energy supplier. In our model, users send their demand vectors for an upcoming period of time to the network and the energy provider responds by broadcasting a dynamic price vector. Energy consumers are concerned with minimizing their total energy cost per day while the power provider aims to maximize its profit while minimizing the peak to average load ratio. Converging to a unique Nash equilibrium solution using a dual constrained optimization problem, our model results motivate follow on research.