Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy Sources
This study investigates a demand-side management problem in which multiple suppliers compete with each other to maximize their own revenue. We consider that suppliers have heterogeneous energy sources and individually set the unit price of each energy source. Then, consumers that share a net utility...
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| Format: | Article |
| Language: | English |
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MDPI AG
2017-09-01
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| Series: | Energies |
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| Online Access: | https://www.mdpi.com/1996-1073/10/9/1342 |
| _version_ | 1798041464601575424 |
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| author | Kireem Han Joohyung Lee Junkyun Choi |
| author_facet | Kireem Han Joohyung Lee Junkyun Choi |
| author_sort | Kireem Han |
| collection | DOAJ |
| description | This study investigates a demand-side management problem in which multiple suppliers compete with each other to maximize their own revenue. We consider that suppliers have heterogeneous energy sources and individually set the unit price of each energy source. Then, consumers that share a net utility react to the suppliers’ decisions on prices by deciding the amount of energy to request, or how to split the consumers’ aggregated demand over multiple suppliers. In this case, the consumers need to consider the power loss and the price to pay for procuring electricity. We analyze the economic benefits of such a pricing competition among suppliers (e.g., a demand-side management that considers consumers’ reaction). This is achieved by designing a hierarchical decision-making scheme as a multileader–multifollower Stackelberg game. We show that the behaviors of both consumers and suppliers based on well-designed utility functions converge to a unique equilibrium solution. This allows them to maximize the payoff from all participating consumers and suppliers. Accordingly, closed-form expressions are provided for the corresponding strategies of the consumers and the suppliers. Finally, we provide numerical examples to illustrate the effectiveness of the solutions. This game-theoretic study provides an example of incentives and insight for demand-side management in future power grids. |
| first_indexed | 2024-04-11T22:21:52Z |
| format | Article |
| id | doaj.art-60381eb9574349cab25e545930f6b75c |
| institution | Directory Open Access Journal |
| issn | 1996-1073 |
| language | English |
| last_indexed | 2024-04-11T22:21:52Z |
| publishDate | 2017-09-01 |
| publisher | MDPI AG |
| record_format | Article |
| series | Energies |
| spelling | doaj.art-60381eb9574349cab25e545930f6b75c2022-12-22T04:00:03ZengMDPI AGEnergies1996-10732017-09-01109134210.3390/en10091342en10091342Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy SourcesKireem Han0Joohyung Lee1Junkyun Choi2School of Electrical Engineering, Korea Advanced Institute of Science and Technology (KAIST), 34051 Daejeon, KoreaDepartment of Software, Gachon University, Seongnam 13120, Korea;School of Electrical Engineering, Korea Advanced Institute of Science and Technology (KAIST), 34051 Daejeon, KoreaThis study investigates a demand-side management problem in which multiple suppliers compete with each other to maximize their own revenue. We consider that suppliers have heterogeneous energy sources and individually set the unit price of each energy source. Then, consumers that share a net utility react to the suppliers’ decisions on prices by deciding the amount of energy to request, or how to split the consumers’ aggregated demand over multiple suppliers. In this case, the consumers need to consider the power loss and the price to pay for procuring electricity. We analyze the economic benefits of such a pricing competition among suppliers (e.g., a demand-side management that considers consumers’ reaction). This is achieved by designing a hierarchical decision-making scheme as a multileader–multifollower Stackelberg game. We show that the behaviors of both consumers and suppliers based on well-designed utility functions converge to a unique equilibrium solution. This allows them to maximize the payoff from all participating consumers and suppliers. Accordingly, closed-form expressions are provided for the corresponding strategies of the consumers and the suppliers. Finally, we provide numerical examples to illustrate the effectiveness of the solutions. This game-theoretic study provides an example of incentives and insight for demand-side management in future power grids.https://www.mdpi.com/1996-1073/10/9/1342demand-side managementpricing mechanismstackelberg gameequilibrium analysisheterogeneous energy sources |
| spellingShingle | Kireem Han Joohyung Lee Junkyun Choi Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy Sources Energies demand-side management pricing mechanism stackelberg game equilibrium analysis heterogeneous energy sources |
| title | Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy Sources |
| title_full | Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy Sources |
| title_fullStr | Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy Sources |
| title_full_unstemmed | Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy Sources |
| title_short | Evaluation of Demand-Side Management over Pricing Competition of Multiple Suppliers Having Heterogeneous Energy Sources |
| title_sort | evaluation of demand side management over pricing competition of multiple suppliers having heterogeneous energy sources |
| topic | demand-side management pricing mechanism stackelberg game equilibrium analysis heterogeneous energy sources |
| url | https://www.mdpi.com/1996-1073/10/9/1342 |
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