Pricing Electricity in Residential Communities Using Game-Theoretical Billings

Abstract

By sharing common assets such as the power grid, prosumers are closely interrelated by their actions and interests. Game theory provides powerful tools for increased coordination among the prosumers to optimize the energy resources. However, depending on the prosumer profiles and the market rules, the individual bills may notably differ and prove to be unfair. In this work, we analyze the outcomes of three relevant game-theoretical billing methods, which are innovatively transposed to the day-ahead scheduling of energy exchange within a liberalized residential community dominated by distributed energy resources. The first two approaches rely on a (static) daily billing scheme, while the third considers a multi-temporal (continuous) billing. The Nash equilibria are computed using distributed algorithms, hence ensuring individual decision-making and avoiding third-party dependencies. The cost distributions are assessed using both a qualitative and a quantitative comparison based on various prosumer profiles in a modern smart grid. It is shown that, depending on the billing option, either the contribution towards the entity (i.e., the ability to improve the global solution) or the individual empowerment (i.e., the ability to bargain) can be preferentially incentivized.