Three-party energy management with distributed energy resources in smart grid

In this paper, the benefits of distributed energy resources are considered in an energy management scheme for a smart community consisting of a large number of residential units (RUs) and a shared facility controller (SFC). A noncooperative Stackelberg game between the RUs and the SFC is proposed in order to explore how both entities can benefit, in terms of achieved utility and minimizing total cost respectively, from their energy trading with each other and the grid. From the properties of the game, it is shown that the maximum benefit to the SFC, in terms of reduction in total cost, is obtained at the unique and strategy-proof Stackelberg equilibrium (SE). It is further shown that the SE is guaranteed to be reached by the SFC and RUs by executing the proposed algorithm in a distributed fashion, where participating RUs comply with their best strategies in response to the action chosen by the SFC. In addition, a charging-discharging scheme is introduced for the SFC's storage device that can further lower the SFC's total cost if the proposed game is implemented. Numerical experiments confirm the effectiveness of the proposed scheme