A game-theoretical decision-making scheme for electricity retailers in the smart grid with demand-side management

In the smart grid, demand-side management (DSM) is an important mechanism for improving the reliability of the grid by dynamically changing or shifting electricity consumption. Real-time pricing is one of the most important DSM strategies. Moreover, in an electricity market, retailers procure electricity from various electricity sources, and then sell it to customers. Therefore, it is critical for retailers to make effective procurement and price decisions. In this paper, we propose a novel game-theoretical decision-making scheme for electricity retailers in the smart grid using real-time pricing DSM. We model and analyze the interactions between the retailer and electricity customers as a four-stage Stackelberg game. Simulation results show the effectiveness of the proposed scheme and how the system parameters affect the procurement and price decisions.