Demand Response Flexibility Potential Trading in Smart Grids: A Multileader Multifollower Stackelberg Game Approach

The value of demand response (DR) for improving the operational efficiency of smart grids has been widely recognized. To further explore the potential DR flexibility, this article presents a novel framework for DR resource trading between multiple service providers (SPs) and end customers, in which SPs are supposed to offer diversified incentives to a resource trading center (RTC) while anticipating responses from the demand side. Distinguished from previous studies, in this work each end customer is endowed the authority to simultaneously trade with multiple SPs with the intention of maximizing their net utilities. The trading process between SPs and customers is demonstrated by a multileader multifollower Stackelberg game, due to its superiority of modeling problems with hierarchical decision-making behaviors. To solve the formulated game, an exact potential function is proposed to help determine the unique Nash equilibrium (NE) among SPs, which serves as the cornerstone for further deriving the Stackelberg equilibrium (SE), i.e., the ultimate outcome of the resource trading process. Simulation results verified that the DR flexibility was significantly increased compared with the case when there is only one SP responsible for the entire trading on behalf of all the end customers. Moreover, the proposed approach is also able to bring extra benefits for both SPs and customers in terms of net profit and net utility value.