Strategic behavior and market power of aggregators in energy demand networks

This paper considers optimization problems of energy demand networks including aggregators and investigates strategic behavior of the aggregators. The energy demand network including aggregators will be optimized through pricing. Under this optimization process, the aggregator acts as intermediate between energy supply sources and a large number of consumers and is expected to moderate tasks to solve a large scale optimization problem. We propose an optimization process that uses information exchange or aggregation by the aggregators, which is actually an intermediate model of the well-known two extremal models. From the consumer's point of view, the aggregator is expected to have enough negotiation power on behalf of the consumers. This will be a main theme of this paper and we investigate strategic behavior of the aggregators. We suppose that the aggregator will try to pursue the benefit as well as market power by choosing the design parameter in its cost function. The strategic decision making by the aggregators could provide useful insights in qualitative analysis of the energy demand network, and the results of numerical example indicate that, for example, oligopoly by the aggregator may not be beneficial to the consumers.