Economic Dispatch with Demand Response in Smart Grid: Bargaining Model and Solutions

This paper proposes an economic dispatch strategy for the electricity system with one generation company, multiple utility companies and multiple consumers, which participate in demand response to keep the electricity real-time balance. In the wholesale markets, multiple utility companies will commonly select a reliable agent to negotiate with the generation company on the wholesale price. It is challengeable to find a wholesale price to run the electricity market fairly and effectively. In this study, we use the multiple utility companies' profits to denote the utility function of the agent and formulate the interaction between the agent and the generation company as a bargaining problem, where the wholesale price was enforced in the bargaining outcome. Then, the Raiffa-Kalai-Smorodinsky bargaining solution (RBS) was utilized to achieve the fair and optimal outcome. In the retail markets, the unfavorable disturbances exist in the power management and price when the consumers participate in the demand response to keep the electricity real-time balance, which motivates us to further consider the dynamic power management algorithm with the additive disturbances, and then obtain the optimal power consumption and optimal retail price. Based on the consumers' utility maximization, we establish a price regulation model with price feedback in the electricity retail markets, and then use the iterative algorithm to solve the optimal retail price and the consumer's optimal power consumption. Hence, the input-to-state stability condition with additive electricity measurement disturbance and price disturbance is given. Numerical results demonstrate the effectiveness of the economic dispatch strategy.