Value of demand response in the smart grid

Quanyan Zhu, Peter Sauer, Tamer Başar

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

In this paper, we raise the question: What is the value that demand response management (DRM) can bring to generation companies and consumers in the smart grid? The question is fundamental for understanding the efficiency and impact of DRM on the future power grid. To answer this question, we first establish a Stackelberg game framework that captures the hierarchical communication architecture of the energy system, and the rational behaviors of the consumers and the market operator. We define the value of demand response based on the Stackelberg equilibrium (SE) solution to the hierarchical two-person game problem, and the standard optimal solution to economic dispatch problem. In order to compute the equilibrium solution, we show that a consistency principle can be used to characterize the SE of the game in which the follower responds to the dual variable of the leader's problem. We use logarithmic utility functions to illustrate the solution concept and show that in some cases, DRM provides conflicting values to the gencos and consumers.

Original languageEnglish (US)
Title of host publication2013 IEEE Power and Energy Conference at Illinois, PECI 2013
Pages76-82
Number of pages7
DOIs
StatePublished - 2013
Event2013 IEEE Power and Energy Conference at Illinois, PECI 2013 - Champaign, IL, United States
Duration: Feb 22 2013Feb 23 2013

Publication series

Name2013 IEEE Power and Energy Conference at Illinois, PECI 2013

Other

Other2013 IEEE Power and Energy Conference at Illinois, PECI 2013
CountryUnited States
CityChampaign, IL
Period2/22/132/23/13

ASJC Scopus subject areas

  • Energy Engineering and Power Technology
  • Fuel Technology

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