A Cooperative Demand Response Scheme Using Punishment Mechanism and Application to Industrial Refrigerated Warehouses

This paper proposes a cooperative demand response (CDR) scheme for load management in smart grid. The CDR 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 one-shot 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 CDR scheme is applied to achieve load management of industrial refrigerated warehouses. To implement the CDR scheme in large-scale systems, we group the refrigerated warehouses into clusters and utilize the CDR scheme within each cluster. Numerical results demonstrate that the CDR scheme can reduce the electricity costs, drop the electricity prices, and curtail the total energy consumption in comparison with the noncooperative demand response scheme.