Optima real-time pricing scheme in smart grid considering time preference: A Stackelberg game model

Smart grid network enables more efficient energy consumption through communications between a provider and consumers. Once the energy provider declares a price policy, consumers are informed immediately through the... [ view full abstract ]

Smart grid network enables more efficient energy consumption through communications between a provider and consumers. Once the energy provider declares a price policy, consumers are informed immediately through the communication channels such as the control units and update their energy consumption schedule to maximize own utility under the given pricing. In this research we propose a Stackelberg game model to analyze this two-stage decision making problem considering heterogeneous time preferences of consumers and restricted supply capacity. In the first stage, the energy supplier determines the optimal energy price for each time slot to maximize one’s total profit. Following that, energy users determine the optimal energy consumption in each time slot.Equilibrium strategies in which the optimal consumption schedules of each consumer and the optimal real time pricing for the provider are analytically derived. To verify the effect of real-time pricing and time preference quantitatively, we performed the numerical example analysis using the equilibrium results of our model. Results suggest that the provider can induce consumers to use electricity in non-peak time hours by applying appropriate price policy thereby the peak to average ratio could be consequently decreased.