---
title: "Aggregate Demand-Based Real-Time Pricing Mechanism for the Smart Grid: A Game-Theoretic Analysis"
authors:
  - "Sambaran Bandyopadhyay"
  - "Ramasuri Narayanam"
  - "Ramachandra Kota"
  - "Pg Mohammad Iskandarbin Pg Hj Petra"
  - "Zainul Charbiwala"
doi: ""
url: "https://ijcai.org/proceedings/2015/362"
pdf: "https://ijcai.org/proceedings/2015/0362.pdf"
venue: "Proceedings of the Twenty-Fourth International Joint Conference on Artificial Intelligence"
year: 2015
pages: "2554-2559"
track: "Special Track on Computational Sustainability"
keywords:
---

# Aggregate Demand-Based Real-Time Pricing Mechanism for the Smart Grid: A Game-Theoretic Analysis

Sambaran Bandyopadhyay, Ramasuri Narayanam, Ramachandra Kota, Pg Mohammad Iskandarbin Pg Hj Petra, Zainul Charbiwala

*Proceedings of the Twenty-Fourth International Joint Conference on Artificial Intelligence*, pages 2554-2559.

## Abstract

Managing peak energy demand is a critical problem for energy utilities. The energy costs for the peak periods form a major component of their overall costs. Real-time pricing mechanisms have been explored as a means of flattening the demand curve and reducing the energy costs. In this paper, we examine a model of ex-post real-time pricing mechanism that can be used by the utilities for this purpose. In particular, we study a convex piecewise linear cost function that modulates the price of energy based on the aggregate demand of the utility. We provide a game-theoretic analysis of the mechanism by constructing a non-cooperative game among the consumers of a utility wherein the cost to each consumer is decided by the pricing mechanism. We formally characterize the Nash equilibrium and other properties for two settings: (i) consumers have full flexibility in shifting their demand, and (ii) consumers can shift only a fraction of their demand at any time to another time.