Incentivizing Strategy for Demand Response Aggregator Considering Market Entry Criterion: A Game Theoretical Approach

Abstract

This paper presents a novel incentivizing strategy for a demand response (DR) aggregator to participate in an intra-day market organized by the grid operator (GO). By taking the market entry criterion into consideration, the proposed incentivizing strategy is able to help the aggregator determine the optimal incentive for each customer based on their identified characteristics or preferences. The hierarchical decision making procedure between the aggregator and customers is casted into a Stackelberg game. In accordance, an optimal incentivizing strategy can be ascertained for the aggregator, which further helps the aggregator elicit optimal load reductions from enrolled customers meanwhile maximizing its potential profit. Simulation results show that the proposed incentivizing strategy is effective in helping the aggregator determine optimal incentive for each customer in face of different external factors.