Competitive Energy Trading Framework for Demand-Side Management in Neighborhood Area Networks

Abstract

This paper, by comparing three potential energy trading systems, studies the feasibility of integrating a community energy storage (CES) device with consumer-owned photovoltaic (PV) systems for demand-side management of a residential neighborhood area network. We consider a fully competitive CES operator in a non-cooperative Stackelberg game, a benevolent CES operator that has socially favorable regulations with competitive users, and a centralized cooperative CES operator that minimizes the total community energy cost. The former two game-theoretic systems consider that the CES operator first maximizes their revenue by setting a price signal and trading energy with the grid. Then the users with PV panels play a non-cooperative repeated game following the actions of the CES operator to trade energy with the CES device and the grid to minimize energy costs. The centralized CES operator cooperates with the users to minimize the total community energy cost without appropriate incentives. The non-cooperative Stackelberg game with the fully competitive CES operator has a unique Stackelberg equilibrium at which the CES operator maximizes revenue and users obtain unique Pareto-optimal Nash equilibrium CES energy trading strategies. Extensive simulations show that the fully competitive CES model gives the best tradeoff of operating environment between the CES operator and the users.