A prospect-theoretic game approach to demand response market participation through energy sharing in energy storage systems under uncertainty

Abstract

The Paris Agreement, which is carried out in a bottom-up manner, is giving great vitality to the transition to low-carbon energy system. Accordingly, as the spread of renewable energy increases, securing flexibility resources is emerging as a keyword in the power system and power market, and many studies on demand response (DR) and energy storage system (ESS) classified as demand-side flexible resources are being conducted. However, most of the studies on DR are on voluntary DR programs that participate through bidding among incentive-based DR or price-based DR programs, and ESS faced difficulties in its distribution due to low economic feasibility. Therefore, in this work, we propose a feasible process for participating in a reliability DR program that guarantees high profitability but involves high uncertainty, and non-cooperative game model is suggested to mitigate the uncertainty through surplus electricity-trading model of ESS. In addition, a subjective decision-making based on prospect theory is proposed to reflect the impact of the uncertainty about the incentive-based program’s engagement. Case study results performed in an environment formed based on actual operation data of the Korean DR market prove that participants’ uncertainty is mitigated when participating in the DR market through power trading of ESS through the proposed model. In addition, a small-scale ESS with an average benefit–cost ratio of 0.78 improves by up to 1.08 (1.04 with a standard scenario).