Two-Stage Game Theoretic Approach for Energy Management in Networked Microgrids

Abstract

The architecture of smart distribution systems is becoming more and more complex after the appearance of networked microgrids. Maintaining the power balance between demand and supply in a cost effective way is turning into a very challenging task. Due to the intermittent nature of renewable energy and distributed architecture of microgrids (MGs), the energy management in networked microgrids requires a smart coordinated control. This paper presents an optimal energy management system (EMS) for networked microgrids in a smart distribution system. The problem is formulated with a two-stage game theoretic approach. In the first stage, a non-cooperative demand response (DR) game is designed between MGs and distribution system operator (DSO) to find the optimal power consumption of MGs. In the second stage, a coalition formation game among networked microgrids is designed to self-organize into structured coalitions that maximize the profits from energy exchange. We develop an algorithm based on merge and split rules to form coalitions between MGs. Then, we design an energy transfer algorithm for energy exchange between MGs within the same coalition to minimize the power loss. The simulation results demonstrate a satisfactory performance in terms of profit maximization that exceeds 21% and in terms of loss reduction in distribution system that exceeds 51%, thanks to the proposed cooperative scheme.