For every entity not indifferent to or unaffected by changes in the environment in which it operates, any decision taken locally inevitably reflects the inherent characteristics as well as the influence of extrinsic parameters. In turn, the coexistence of various entities, possibly with conflicting goals, forms an environment in which each individual is called upon to act. The interrelation between the decision-making process of interacting entities formulates a complex environment, where the behavior of each entity influences and is influenced by the behavior of the rest. In this respect, game theory is considered particularly useful for describing situations such as these, as it offers the appropriate normative framework for giving form to problems that would have been otherwise difficult to cast in a mathematical manner. One category includes hierarchical decision-making, that corresponds to a Stackelberg (leader-follower) game, which can be described mathematically by a bilevel programming problem.

Chapter Contents:

• 10.1 Introduction
• 10.1.1 Related bibliography
• 10.1.2 Overview
• 10.2 Bilevel decision framework for optimal energy procurement of DERs
• 10.2.1 Nomenclature
• 10.2.2 Model
• 10.2.3 Solution methodology
• 10.2.4 Implementation
• 10.2.4.1 Input data-scenarios
• 10.2.4.2 Computational issues
• 10.2.5 Results
• 10.3 Bilevel decision framework for optimal energy management of DERs
• 10.3.1 Nomenclature
• 10.3.2 Model
• 10.3.2.1 Upper-level problem
• 10.3.2.2 Lower-level problems
• 10.3.3 Solution methodology
• 10.3.4 Implementation
• 10.3.4.1 Input data-scenarios
• 10.3.4.2 Computational issues
• 10.3.5 Results
• 10.4 Conclusions
• Bibliography

Inspec keywords: demand side management; game theory; decision making; smart power grids

Other keywords: complex environment; Stackelberg game; hierarchical decision-making process; demand side management; smart grid; game theory; bilevel programming problem; leader-follower

Subjects: Power system management, operation and economics; Game theory