Transactive Energy for Flexible Prosumers Using Algorithmic Game Theory

In modern smart grids, the focus is increasingly shifted towards distributed energy resources and flexible electricity assets owned by prosumers. A system with high penetration of flexible prosumers, has a very large number of variables and constraints, while a lot of the information is local and non-observable. Decomposition methods and local problem solving is considered a promising approach for such settings, particularly when the implementation of a decomposition method features a market-based analogy, i.e. it can be implemented in a Transactive Energy fashion.

In this paper we present an auction-theoretic scheme for a setting with non-convex prosumer models and resource constraints. The scheme is evaluated on a particular case study and its scalability and efficiency properties are tested and compared to an optimal benchmark solution. A game-theoretic analysis is made with respect to how an intelligent agent, that bids on behalf of a prosumer can try to strategize within the auction, in order to make itself better-off. Our simulations show that there is an alignment of incentives, i.e., when the prosumers try to strategize, they actually improve the auction's efficiency.