Non-stationary demand side management method for smart grids

Demand side management (DSM) is a key solution for reducing the peak-time power consumption in smart grids. The consumers choose their power consumption patterns according to different prices charged at different times of the day. Importantly, consumers incur discomfort costs from altering their power consumption patterns. Existing works propose stationary strategies for consumers that myopically minimize their short-term billing and discomfort costs. In contrast, we model the interaction emerging among self-interested consumers as a repeated energy scheduling game which foresightedly minimizes their long-term total costs. We then propose a novel methodology for determining optimal nonstationary DSM strategies in which consumers can choose different daily power consumption patterns depending on their preferences and routines, as well as on their past history of actions. We prove that the existing stationary strategies are suboptimal in terms of long-term total billing and discomfort costs and that the proposed strategies are optimal and incentive-compatible (strategy-proof). Simulations confirm that, given the same peak-to-average ratio, the proposed strategy can reduce the total cost (billing and discomfort costs) by up to 50% compared to existing DSM strategies.