Center for Research in Energy Systems Transformation (CREST)

This paper proposes a cooperative demand response scheme for load management in smart grid. The cooperative demand response scheme is formulated as a constrained optimization problem that generates a Pareto-optimal response strategy profile for consumers. Comparing with the noncooperative response strategy (i.e., Nash equilibrium) obtained from the oneshot demand management game, the Pareto-optimal response strategy reduces the electricity costs to the consumers. We further develop an incentive-compatible trigger-and-punishment mechanism to avoid the noncooperative behaviors of the selfish consumers. Furthermore, the cooperative demand response scheme is applied to load management of industrial refrigerated warehouses. To implement the cooperative demand response scheme in large-scale system, we divide the refrigerated warehouses into different clusters and implement the cooperative demand response scheme inside each cluster. Numerical results demonstrate that the cooperative demand response scheme can reduce the electricity costs, drop the electricity prices, and curtail the total energy consumption comparing with the noncooperative demand response scheme.