Pricing Mechanisms for Day-Ahead Demand Management in Multi-Generator Power Grid

Decentralization of power supply, development and growing penetration of renewable energy, as well as increasing energy consumption require new models and techniques for sustainable and efficient power grids. Uncontrollable nature of renewable energy supply, such as weather-dependent solar and wind generation, leads us to the idea of production-oriented consumption, when consumers adapt to currently available energy generation. However, consumers need to be motivated to follow this goal, since changes in consumption behavior are naturally inconvenient. One of possible motivation schemes is use of pricing mechanisms. In this work, we formulate a multi generator power grid model over day-head time span. We define consumer cost functions, and describe a competitive game of consumers. Then we incorporate the pricing mechanisms on the generators side that influence the equilibrium consumption profile. Finally, we implement a sample 6-node model in order to verify this technique.