The project considers how to design electricity pricing for the electric grid with high penetration of renewable energy sources. The scenario considered includes fluctuating electricity prices and availability of energy storing devices such as batteries to independent power producers. Using storage devices such as locally situated batteries, renewable generation sources need not sell their produced energy into the grid immediately, but can game the system to maximize an expected benefit. The project begins with this observation, and gives the fundamentals of an interesting formulation of the management of distributed renewable electricity generation as a game. The concept is novel and can lead to significant impact on the design of electricity markets for power grids with high levels of renewable generation. Application of game theoretic ideas to the pricing models for power grid with increasing presence of renewable generation is an exciting topic that can serve as an outstanding educational and research example for other applications as well. The framework can also enable policy makers to predict the cross-layer system behaviors and develop associated pricing and regulation policies for emerging paradigms in the power industry.
The investigators will study possible gaming formulations of electricity markets for high levels of renewable generation. Mechanism design ideas from game theory will be used to forge a pricing structure that will naturally lead to a desirable social equilibrium. The project enables a close collaboration between two senior investigators from different research domains to explore the scientific foundations of pricing of electricity with distributed generation in smart grids. The developed framework will extend the optimal power flow problems into a distributed framework that naturally captures the distributed control and management of geographically dispersed and heterogeneous distributed renewable sources. The project will create knowledge beyond the existing frameworks of power systems, and bridge the economic, control, and device layers of the power grid. The project consists of three coherent research tasks that are summarized as follows: (1) Establishing game-theoretic models for smart grids with high levels of distributed generation from renewable sources, and developing analytical tools to understand their impact on existing centralized generation. (2) Developing a mechanism design theory to design pricing mechanisms and the penetration levels of renewable resources to achieve an efficient and resilient hybrid power grid that consists of both centralized and distributed generation. (3) Building software tools and case studies using the distributed generation networks in Manhattan to provide publicly accessible benchmarks for the envisioned framework and validate the game-theoretic system designs.
