Demand response strategy based on Stackelberg game and its distributed solution

Abstract

In the interactions between load aggregators (LAs) and customers within the electricity market, a non-cooperative Stackelberg game model involving multiple LAs and multiple customers is developed to investigate the incentive strategies of LAs and the response strategies of customers. This model allows customers to trade with multiple LAs, freely allocating response resources based on incentive prices to encourage benign competition among LAs. It constructs differentiated users from the perspective of dissatisfaction with electricity usage and differentiated LAs from the perspective of deviations in aggregated load response, with both parties aiming to maximize their utility functions through game play. The optimal decisions of the players are analyzed using backward induction method, and a distributed solution framework is proposed based on consensus algorithms and optimization algorithms to ensure the privacy of users and LAs during response process. Finally, simulations are conducted to validate the rationality of the proposed multi-LA-multi-customer transaction framework, as well as the effectiveness of our proposed consensus-based solution framework. The simulation results indicate that the proposed model is capable of providing optimal decisions for LAs and customers while ensuring privacy protection.