Distributed Energy Trading in Microgrids: A Game-Theoretic Model and Its Equilibrium Analysis

TLDR

Multiple interconnected microgrids coexist, with some possessing surplus energy for sale or storage while others require additional power to meet local demand. This paper proposes a distributed energy‑trading mechanism for microgrids operating in a competitive market. Sellers independently choose how much energy to offer, balancing revenue against storage benefits, while buyers submit unit‑price bids; energy and revenue are allocated proportionally to bids and sales, respectively, and the process is modeled as a multileader‑multifollower Stackelberg game. The utility‑based allocation converges to a unique equilibrium that maximizes all microgrids’ payoffs, demonstrating that the game‑theoretic approach incentivizes future energy trading.

Abstract

This paper proposes a distributed mechanism for energy trading among microgrids in a competitive market. We consider multiple interconnected microgrids in a region where, at a given time, some microgrids have superfluous energy for sale or to keep in storage facilities, whereas some other microgrids wish to buy additional energy to meet local demands and/or storage requirements. Under our approach, sellers lead the competition by independently deciding the amount of energy for sale subject to a tradeoff between the attained satisfaction from the received revenue and that from the stored energy. Buyers follow the sellers' actions by independently submitting a unit price bid to the sellers. Correspondingly, the energy is allocated to the buyers in proportion to their bids, whereas the revenue is allocated to the sellers in proportion to their sales. We study the economic benefits of such an energy trading mechanism by analyzing its hierarchical decision-making scheme as a multileader-multifollower Stackelberg game. We show that distributing the energy based on a well-defined utility function converges to a unique equilibrium solution for maximizing the payoff of all participating microgrids. This game-theoretic study provides an incentive for energy trading among microgrids in future power grids.