An application of insurance mechanism in risk management for energy internet

As a completely new residential distribution infrastructure,energy internet facilitates transactions of equipment,energy and services. However,there is security risk under all the facilities.This paper proposes an electricity pricing model based on insurance from the perspective of maximizing the benefits of Energy Internet service providers by using the principal-agent theory. The consumer prepays the provider insurance premiums and signs a contract. The provider sets electricity price according to the premiums and therefore provides differentiated electric services for the consumer. Loss suffered by the consumer due to the power failure is compensated by the provider according to the contract. The equivalent model is presented and a necessary condition of the optimal strategy is obtained on the basis of Pontryagin’s maximum principle. At last,a numerical example is presented,which illustrates the effectiveness of the proposed model.