Subsidized power interruption for reducing peaks in energy demand: A stackelberg game

The insertion of new technologies in energy markets has created a framework full of opportunities concerning better energy planning. This study addresses the use of Power Supply Interruption as a tool for reducing consumers´ demand voluntarily, also known as Voluntary Load Curtailment (VLC) programs. In VLC, a fee similar to a subsidy is paid to a consumer so as not to use energy for a certain time period. We consider a power producer and a group of consumers with different characteristics concerning their energy consumption and the level of interruption they can accept. For several types of VLC schemes and fee compensations, this problem is formulated as a static Stackelberg game which is addressed with use of bilevel programming methods. We seek to find the interaction between the compensation offered and the best decision for each player. Some first results show that all players could benefit from a VLC program at the same time.