Game theory and pricing strategies for demand-side management in the smart grid

Abstract

Demand-side management is an effective means to optimize resource utilization in the electricity grid. The smart grid can enable the utility company to shape the users consumption by adopting appropriate pricing strategies. Having received the price information, each user may independently schedule its appliances to minimize its electricity payment. In this paper, we consider a smart grid scenario with a single utility company and multiple users where the utility company adopts day-ahead pricing strategy. We formulate the problem as a binary linear programming problem. The simulation results show that users can reduce their bills by 25% using the proposed technique.