Contribution-Based Energy-Trading Mechanism in Microgrids for Future Smart Grid: A Game Theoretic Approach

Abstract

This paper designs a contribution-based energy-trading mechanism among microgrids in a competitive market. In each fixed time interval, each microgrid can be an energy provider or a consumer according to their energy generation and local demand. Under the trading mechanism, there is a distributor which gathers the surplus energy from providers and distributes it to the consumers based on the consumers' historical contribution level. To design the trading mechanism, a novel contribution-based energy allocation policy (EAP) is proposed. Each consumer who knows this distribution rule decides the amount of requesting energy in order to maximize its utility, i.e., the quantity of energy it will receive. Finally, the economic benefits of such trading mechanism are studied by analyzing the decision-making procedures of consumers and distributor. The problem is formulated as a noncooperative energy competition game (ECG) among the consumers. The existence and the uniqueness of Nash equilibrium (NE) are shown, and the NE solution is given as a closed form. Also, even though there are foolish consumers which do not take the given NE solution, a consumer which takes the NE solution will not lose out on its utility. The proposed energy-trading mechanism is stable enough to be applied to a practical microgrid trading market.