NDLI: A Probability Theory Based Price Determination Framework for Utility Companies in an Oligopolistic Energy Market

Content Provider	IEEE Xplore Digital Library
Author	Tiansong Cui Yanzhi Wang Xue Lin Nazarian, S. Pedram, M.
Copyright Year	2014
Description	Author affiliation: Dept. of Electr. Eng., Univ. of Southern California, Los Angeles, CA, USA (Tiansong Cui; Yanzhi Wang; Xue Lin; Nazarian, S.; Pedram, M.)
Abstract	Distributed power generation and distribution network with the dynamic pricing scheme are the major trend of the future smart grid. A smart grid is a network which contains multiple non-cooperative utility companies that offer time-of-use dependent energy prices to energy consumers and aim to maximize their own profits. Decentralized power network allows each energy consumer to have multiple choices among different utility companies. In this paper, an optimization framework is introduced to determine the energy price for utility companies in an oligopolistic energy market. At the beginning of each billing period (a day), each utility company will announce the time-of-use dependent pricing policy during the billing period, and each energy consumer will subsequently choose a utility company for energy supply to minimize the expected energy cost. The energy pricing competition among utility companies forms an n-person game because the pricing strategy of each utility company will affect the profits of others. To be realistic, the prediction error of a user's energy consumption is properly accounted for in this paper and is assumed to satisfy certain probability distribution at each time slot. We start from the most commonly-used normal distribution and extend our optimization framework to a more general case. A Nash equilibrium-based pricing policy is presented for the utility companies and the uniqueness of Nash equilibrium is proved. Experimental results show the effectiveness of our game theoretic price determination framework.
Sponsorship	IEEE Corpus Christi Sect.
Starting Page	106
Ending Page	111
File Size	372601
Page Count	6
File Format	PDF
ISBN	9781479939343
ISSN	21665478
DOI	10.1109/GREENTECH.2014.11
Language	English
Publisher	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Publisher Date	2014-04-03
Publisher Place	USA
Access Restriction	Subscribed
Rights Holder	Institute of Electrical and Electronics Engineers, Inc. (IEEE)
Subject Keyword	Energy consumption Probability theory Companies Pricing Gaussian distribution Oligopolistic market Dynamic pricing Nash equilibrium Mathematical model Smart grid Optimization
Content Type	Text
Resource Type	Article

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