A Market for Retail Electric Provider Based Demand Response

Xia, Bainan; Lee, Kiyeob; Shakkottai, Srinivas; Kalathil, Dileep

doi:10.1109/cdc40024.2019.9029395

Cited by 4 publications

(4 citation statements)

References 8 publications

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Section: Related Workmentioning

confidence: 99%

“…Prior works that are the closest to our paper are [12], [13], [20], [21] which present mechanisms for demand response markets that incentivize demand response-providers to truthfully report their baselines. While there are many differences between the formulations in [12], [13], [20], [21] and this paper, we highlight three major ones here. First, the aforementioned papers restrict attention to piecewise linear valuations for demand response providers and leave the case of general concave valuations as an open problem.…”

Section: Related Workmentioning

confidence: 99%

“…The mechanism incentivizes demand response providers to truthfully report the probability distribution and the realization of these quantities in the day-ahead market and in real time respectively. Finally, the mechanisms developed in [20], [21] implement truth-telling only as a Nash equilibrium whereas the mechanism presented in this paper implements truth-telling in a stronger notion of equilibrium, namely Dominant Strategy Non-Bankrupting equilibrium. References [12], [13] implement truth-telling in dominant strategies but under the assumptions of deterministic piecewise linear costs and deterministic baselines.…”

Section: Related Workmentioning

confidence: 99%

“…References [12], [13] implement truth-telling in dominant strategies but under the assumptions of deterministic piecewise linear costs and deterministic baselines. Since our formulation does not assume any specific form for the cost functions, or assume baselines and costs to be deterministic, it is considerably more general than the formulations in [12], [13], [20], [21]. References [22]- [26] are a few other papers on mechanism design for DR.…”

Section: Related Workmentioning

confidence: 99%

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A Two-Stage Mechanism for Demand Response Markets

Bharadwaj¹,

Roozbehani²,

Dahleh³

2022

Preprint

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We present a two-stage mechanism for creating markets for demand response. Demand response involves system operators using incentives to modulate electricity consumption around peak hours or when faced with an incidental supply shortage. However, system operators typically have imperfect information about their customers' counterfactual consumption, that is, their consumption had the incentive been absent. The standard approach to estimate the reduction in a customer's electricity consumption then is to estimate their counterfactual baseline. However, this approach is not robust to estimation errors or strategic exploitation by the consumers and can potentially lead to overpayments to customers who do not reduce their consumption and underpayments to those who do. In addition, the incentive payments are often designed based on models of consumer behavior or other ad-hoc rules that are only partially accurate at best. The two-stage mechanism proposed in this paper circumvents the aforementioned issues. In the dayahead market, the participating loads submit the probability distribution of their next-day consumption. In real-time, if and when called upon for demand response, the loads report the realization of their baseline demand and receive credit for reductions below their reported baseline. The mechanism guarantees ex post incentive compatibility of truthful reporting of the probability distribution in the day-ahead market and truthful reporting of the realized baseline demand in real-time. The mechanism can be viewed as an extension of the celebrated Vickrey-Clarke-Groves mechanism augmented with a carefully crafted second-stage penalty for deviations from the day-ahead bids.

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