Game Theoretic Analysis of Incentive-Based Power Consumption Reduction Problems with For-Profit or Nonprofit Aggregator

Abstract

The demand response is attracting attention to perform electric power load leveling. In this paper, we consider a power consumption reduction problem with an aggregator that requests electric power consumption reduction to consumers by allocating a part of its profit to them as an incentive. We formulate interactions among consumers as a game, where the incentive to each consumer is determined by his/her contribution to the total power consumption reduction, and the consumer determines his/her own reduction amount selfishly to maximize his/her payoff. The uniqueness of best responses of each consumer and an equilibrium condition of the game are also derived. By using numerical simulations, we show relationship among incentive allocation rate, realized total reduction amount through the game, and the aggregator's payoff for the cases with the for-profit and the nonprofit aggregator.