Distributed Demand Peak Reduction With Non-Cooperative Players and Minimal Communication

Demand response technology offers the exciting potential to reduce peak energy demand, electricity infrastructure expenditure, and household electricity bills. In this paper, a pricing mechanism that relies on non-cooperative heterogeneous loads knowledgeable of future energy consumption-such as electric vehicles-transferring minimal amounts of information to achieve peak demand response in a distributed fashion, whilst maintaining the privacy of the players. The existence of a Nash equilibrium is proven, as well as convergence conditions proving uniqueness of a Nash equilibrium and the stability of an “Iterated Synchronous Best Response Algorithm.” The price of anarchy (PoA) is proven to approach 1 as the number of homogeneous players approaches infinity, indicating there is no advantage to cooperation for a large number of similar players. Finally, simulation results are presented which suggest that the PoA for a system with heterogeneous players is likely to be proportional to the spread of energy consumption constraints.