Dependable Demand Response Management in the Smart Grid: A Stackelberg Game Approach

Demand Response Management (DRM) is a key component in the smart grid to effectively reduce power generation costs and user bills. However, it has been an open issue to address the DRM problem in a network of multiple utility companies and consumers where every entity is concerned about maximizing its own benefit. In this paper, we propose a Stackelberg game between utility companies and end-users to maximize the revenue of each utility company and the payoff of each user. We derive analytical results for the Stackelberg equilibrium of the game and prove that a unique solution exists. We develop a distributed algorithm which converges to the equilibrium with only local information available for both utility…