Dependable Demand Response Management in the Smart Grid: A Stackelberg Game Approach

Abstract

Demand Response Management (DRM) is a key component in the smart grid to effectively reduce power generation costs and user bills. However, it has been an open issue to address the DRM problem in a network of multiple utility companies and consumers where every entity is concerned about maximizing its own benefit. In this paper, we propose a Stackelberg game between utility companies and end-users to maximize the revenue of each utility company and the payoff of each user. We derive analytical results for the Stackelberg equilibrium of the game and prove that a unique solution exists. We develop a distributed algorithm which converges to the equilibrium with only local information available for both utility companies and end-users. Though DRM helps to facilitate the reliability of power supply, the smart grid can be succeptible to privacy and security issues because of communication links between the utility companies and the consumers. We study the impact of an attacker who can manipulate the price information from the utility companies. We also propose a scheme based on the concept of shared reserve power to improve the grid reliability and ensure its dependability.