Integration of Constrained Energy Demand Network Using AGV Mechanism under Uncertain Information Environment

Abstract

In the liberalized future power market, social welfare will be maximized by demand side management. Methods of demand side management usually require exchanges of information between consumers and a utility company, but there will be strategic false reports of information. In this research we consider an energy demand network that consists of one utility company and consumers. In this network a day-ahead market is formed and we optimize the schedule of consumption using demand response under equality and inequality constraints. In order to prevent strategic false reports we apply mechanism design theory, which is discussed in economics and game theory. Our proposed integration mechanism is based on AGV mechanism, which is Bayesian incentive compatible and budget balanced. Through a numerical experiment, the effectiveness of the proposed mechanism is demonstrated under equality and inequality constraints.