A Stackelberg Game Approach for Energy Management in Smart Distribution Systems with Multiple Microgrids

The introduction of micro grids (MGs) into the utility grid poses new challenges in the energy management design due to the intermittent characteristics of renewable energy sources and limited storage capacity. In this paper, we proposed a distributed energy management algorithm by taking into consideration the interactions and interconnections among utility companies, MGs, and customers. We model the energy management problem as a two-stage Stackel berg game, in which utility companies and MGs are game leaders, and customers are game followers. Utility companies and MGs make decisions about what price to offer their electricity to customers. Customers adjust their electricity procurement amounts based on the prices offered by utility companies and MGs. We prove that a Nash equilibrium exists in the proposed two-stage Stackelberg game, and the optimum solutions obtained by the distributed energy management algorithm is exactly the Nash equilibrium. We have analyzed and verified the relationships among utility functions, electricity prices, electricity demands, electricity procurement amounts, and pollutant parameters through computer simulations. We have also compared the performance of the proposed distributed algorithm with the centralized algorithm under different simulation conditions.