Aggregators that maximize Market Power in an Energy Demand Network

Abstract

Aggregators are expected to play an important role in implementing demand response in the future energy market. In this research, we present a mathematical model of energy demand networks with a utility company, multiple aggregators and many consumers, wherein the demand of the consumers is optimized through prices determined by the aggregators. In addition to determining the price sent to consumers, aggregators also report their own utility functions to the utility from which the energy price is determined by the utility company. In the present model, the aggregators are modeled as strategic agents to maximize their own benefits and market power by appropriately designing the utility functions to be reported to the utility company. We then establish a model of the aggregators’ decision-making. Finally, we analyze the effects of the aggregators’ decisions on the entire demand network using the proposed model.