A Game Theoretic Model for Smart Grids Demand Management

Demand-side management (DSM) plays a key role in the future of smart grids. Recently, DSM researchers have developed various mathematical models to optimize the demand response. Most of these works ignore the channel impairments' impact on the optimization process. In this paper, we propose a new noncooperative game theoretic model for the management of smart grid's demand considering the packet error rate in our formulation. We set the Nash equilibrium conditions for the proposed model. Under an assumption on the form of the utility functions, we develop a 0-1 mixed linear programming approach to compute nondominated extreme Nash equilibria. Results on a numerical example are provided and some useful insights are presented. Under some assumptions and a fully proven proposition, a feasible nondominated Nash equilibrium solution is found. Finally, we report and comment on computational experiments on randomly generated smart grid DSM game instances with different characteristics.