Integrating energy storage into the smart grid: A prospect theoretic approach

Yunpeng Wang, Walid Saad, Narayan B. Mandayam, H. Vincent Poor

Research output: Chapter in Book/Report/Conference proceedingConference contribution

29 Scopus citations

Abstract

In this paper, the interactions and energy exchange decisions of a number of geographically distributed storage units are studied under decision-making involving end-users. In particular, a noncooperative game is formulated between customer-owned storage units where each storage unit's owner can decide on whether to charge or discharge energy with a given probability so as to maximize a utility that reflects the tradeoff between the monetary transactions from charging/discharging and the penalty from power regulation. Unlike existing game-theoretic works which assume that players make their decisions rationally and objectively, we use the new framework of prospect theory (PT) to explicitly incorporate the users' subjective perceptions of their expected utilities. For the two-player game, we show the existence of a proper mixed Nash equilibrium for both the standard game-theoretic case and the case with PT considerations. Simulation results show that incorporating user behavior via PT reveals several important insights into load management as well as economics of energy storage usage. For instance, the results show that deviations from conventional game theory, as predicted by PT, can lead to undesirable grid loads and revenues thus requiring the power company to revisit its pricing schemes and the customers to reassess their energy storage usage choices.

Original languageEnglish (US)
Title of host publication2014 IEEE International Conference on Acoustics, Speech, and Signal Processing, ICASSP 2014
PublisherInstitute of Electrical and Electronics Engineers Inc.
Pages7779-7783
Number of pages5
ISBN (Print)9781479928927
DOIs
StatePublished - Jan 1 2014
Event2014 IEEE International Conference on Acoustics, Speech, and Signal Processing, ICASSP 2014 - Florence, Italy
Duration: May 4 2014May 9 2014

Publication series

NameICASSP, IEEE International Conference on Acoustics, Speech and Signal Processing - Proceedings
ISSN (Print)1520-6149

Other

Other2014 IEEE International Conference on Acoustics, Speech, and Signal Processing, ICASSP 2014
CountryItaly
CityFlorence
Period5/4/145/9/14

All Science Journal Classification (ASJC) codes

  • Software
  • Signal Processing
  • Electrical and Electronic Engineering

Keywords

  • Smart grid
  • energy storage
  • game theory
  • prospect theory

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    Wang, Y., Saad, W., Mandayam, N. B., & Poor, H. V. (2014). Integrating energy storage into the smart grid: A prospect theoretic approach. In 2014 IEEE International Conference on Acoustics, Speech, and Signal Processing, ICASSP 2014 (pp. 7779-7783). [6855114] (ICASSP, IEEE International Conference on Acoustics, Speech and Signal Processing - Proceedings). Institute of Electrical and Electronics Engineers Inc.. https://doi.org/10.1109/ICASSP.2014.6855114