A game-theoretic approach to energy trading in the smart grid

Yunpeng Wang, Walid Saad, Zhu Han, H. Vincent Poor, Tamer Başar

Research output: Contribution to journalArticlepeer-review

325 Scopus citations


Electric storage units constitute a key element in the emerging smart grid system. In this paper, the interactions and energy trading decisions of a number of geographically distributed storage units are studied using a novel framework based on game theory. In particular, a noncooperative game is formulated between storage units, such as plug-in hybrid electric vehicles, or an array of batteries that are trading their stored energy. Here, each storage unit's owner can decide on the maximum amount of energy to sell in a local market so as to maximize a utility that reflects the tradeoff between the revenues from energy trading and the accompanying costs. Then in this energy exchange market between the storage units and the smart grid elements, the price at which energy is traded is determined via an auction mechanism. The game is shown to admit at least one Nash equilibrium and a novel algorithm that is guaranteed to reach such an equilibrium point is proposed. Simulation results show that the proposed approach yields significant performance improvements, in terms of the average utility per storage unit, reaching up to 130.2% compared to a conventional greedy approach.

Original languageEnglish (US)
Article number6798766
Pages (from-to)1439-1450
Number of pages12
JournalIEEE Transactions on Smart Grid
Issue number3
StatePublished - May 2014

All Science Journal Classification (ASJC) codes

  • General Computer Science


  • Double auctions
  • electric storage unit
  • energy management
  • noncooperative games


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