Real-Time Pricing Mechanism for Electricity Market With Built-In Incentive for Participation

Abstract

This paper proposes a game-theoretic approach to design a distributed real-time electricity pricing mechanism. Our approach is novel in that it guarantees individual rationality, meaning that it provides suppliers and consumers with a guaranteed incentive to participate in the real-time pricing market. Such an incentive is devised by offering a time-varying, situation-dependent subsidy that guarantees that a supplier/consumer profits by switching from a fixed-price contract to the real-time pricing contract. Although we assume that suppliers and consumers decide supply and demand quantities in a fully distributed manner to maximize their own profit, the proposed mechanism guarantees under moderate conditions that the market converges through an iterative process to a Nash equilibrium that maximizes social welfare. Furthermore, in order to guarantee safe operation of an electrical grid, our pricing mechanism increases stability of load frequency control, and at the same time, achieves supply-demand equilibrium by explicitly taking into account an equality constraint through dual decomposition method. We empirically demonstrate by simulations the individual rationality of the proposed mechanism as well as the convergence to supply-demand equilibrium.

Double-uncertainty optimal operation of hybrid AC/DC microgrids with high proportion of intermittent energy sources

“…In this paper the real-time electricity price is assumed to be 1.5 times the day-ahead electricity. This approximates a future pricing regime that could be established to incentivize microgrids to balance as far as possible using their internal resources [26,27].…”

“…There are additional equality and inequality constraints for power balancing within a dispatch interval: the power balance constraint (26) and the equipment capacity constraint (27) for the microgrid; and the state of charge constraint (28) and the charging and discharging power balance constraint (29) for energy storage. For adjusting the diesel generator the unit start and stop constraints do not apply, because it only changes its power within a dispatch interval when it is already on.…”

Retail Energy Management in Electricity Markets: Structure, Challenges and Economic Aspects- a Review

“…These programs are typically used to determine the consumption tariff for end-use consumers [17,19,23,31]. Time of Use (TOU) [41], Critical Peak Pricing (CPP) [42], Extreme Day Pricing (EDP) and Real Time Pricing (RTP) [43] are the most common DR programs which are used as retail pricing schemes. In the incentive based DR programs, a bonus financial scheme is considered as a reward for customers to reduce their electric loads upon request or for giving the program administrator some level of control over the customer's electrical equipment [37].…”

Electrical Market Management Considering Power System Constraints in Smart Distribution Grids

“…As observed from [76], another limitation of existing research in DSM is that most of them do not consider the power system limits such as the maximum capacity of distribution lines, power stability, power losses, and so on. For example, a game-theoretic real-time price market is proposed in [65] to maximize the profit of each participant and uses a dual decomposition technique to solve this problem in a decentralized manner. By neglecting power loss and the corresponding non-linear power flow equations, the proposed optimization method satisfies Slater's condition and the dual decomposition can be implemented.…”