Consensus-based distributed energy management with real-time pricing

Energy management is becoming a crucial issue in the future power grid system as more controllable energy resources and responsive loads with communications abilities are being introduced into the smart grid. This paper proposes a novel distributed approach to deal with energy management in the smart grid under dispatchable distributed generators and responsive loads using real-time pricing (RTP) and consensus networks to maximize the social welfare. In our algorithm, each distributed generation/consumer unit, in response to the local price of energy, decides on its optimal power generation/ consumption level to maximize its benefit at the device level. However, the consensus-based coordination of price among local retailers drives the behavior of the overall system toward the global optimum, despite the greedy behavior of the generation and consumer units. The main features of our algorithm are computational and communicational scalability, as well as privacy of information.