Residential electricity pricing using time-varying and non-time-varying scenarios: an application of game theory

The aim of this work is to analyze and describe the interaction between a residential consumer and the power network. With the growth of power systems and the advent of new energy sources, such as solar energy, it seems to be more essential to investigate how the network and the consumer can interact with each other to achieve more financial benefits. To do that, a static game is defined considering the fact that there is a direct relationship between the amount of load shifted by the consumer and the incentive offered by the network. It is concluded that the Nash equilibrium of this game is when the consumer decides to cooperate with the network during non-peak hours. Finally, a simple optimization problem is defined in which both the consumer and power network try to achieve better financial benefit considering the fact that in the real world the total load of a typical residential consumer can be divided into the flexible and inflexible parts. A time-varying pricing scenario as well as time-of-use and constant pricing scenarios is used. It is concluded that the more convenient scenario for the consumer is the time-of-use scenario, whereas the power network would prefer to use a dynamic one as it leads to more financial benefit.