Dynamic market for distributed energy resources in the Smart Grid

Distributed Energy Resources (DER) are one of the distinguished features of Smart Grid. A combination of small-scale energy generator and storage unit can produce energy to serve the associated load, while at the same time store or sell excessive energy. Assuming there is an energy surplus, the system can choose to sell a portion of its available energy to the market. In this work, an oligopoly model is developed in order to study dynamic pricing in such a scenario. The problem can be characterized as a dynamic N-player differential game, where the optimal solutions correspond to the equilibria of the game. We provide a mathematical analysis for the solution of the game, where a complete characterization of the steady-state price and optimal strategies of the players can be obtained in the symmetric case. Extensive numerical studies are provided to demonstrate the behaviors of the proposed market model and to analyze the impacts of various market parameters on the system.