A Game Theoretical Approach for Load-Shifting and Energy Storage in the Smart Grid

This study presents an electricity market composed of a single energy provider and multiple customers to evaluate the effects of energy storage and load-shifting as part of a smart grid demand response through the use of Stackelberg game models. In these Stackelberg game models, the energy provider is the leader and the customers are the followers. The leader moves first and offers price discounts across different time slots to motivate customers to shift their consumption away from peak consumption periods. The followers respond by deciding whether or not to shift their consumption from their nominal demand, and how much of their load they should shift. In this model, the aim of the energy provider is to maximize its profits, while the consumers aim to minimize their total costs related both to the energy consumption and inconvenience of deviating from the nominal demand. Within this setting, a procedure is proposed to obtain equilibrium outcomes. We begin by evaluating the effects that different types of customers, a market with different degrees of diversity, and a market of different sizes have on the equilibrium discounts and the peak-to-average ratios (PAR). We then continue into a second model in which we incorporate individual inconvenience costs for each customer and each period and evaluate the effects that having a homogeneous market or a heterogeneous market has on the equilibrium discount and PAR. Finally, we introduce a customer side energy storage and evaluate the effects that this system has on the equilibrium discount and PAR in both cases, when it is controlled by the energy provider or when it is controlled by the customers. Our results show that price discounts provide significant leverage to the energy generator and that the use of energy storage is very effective in the reduction of the peak-to-average ratios. The use of both of these tactics provides effective ways to improve profits. Furthermore, when the energy provider controls the energy storage, it deploys them more effectively and achieves its maximum profits and the lowest PAR. When the customers control the energy storage, the equilibrium discounts are higher, but the PAR is also higher. Lastly, our results show that the use of load-shifting always reduces the customers’ total costs, but this reduction is diminished by the implementation of energy storage