Game-theoretical energy management design for smart cyber-physical power systems

In this paper, we consider the energy management problem for smart cyber-physical power systems with conventional utility companies, microgrids (MGs) and customers. We have adopted a game-theoretical approach to model the problem as a hierarchical game, which takes the interactions and interconnections among utility companies, MGs and customers into consideration. We have considered two completely different situations depending on whether utility companies can enforce their strategies upon MGs and customers, and have modelled the problem as a two-stage Stackelberg game and three-stage Stackelberg game, respectively. The backward induction method is used to analyse the proposed games and closed-form expressions are derived for optimum strategies. We prove that there exists a unique Nash equilibrium for each non-cooperative price competition game, and these Nash equilibria constitute the Stackelberg equilibrium. Simulation results show the effectiveness of the proposed algorithm and the relationships among system parameters. © 2015, © 2015 Taylor & Francis.