A Demand-Side Pricing Strategy Based on Bayesian Game

Demand response can improve the stability of power system and reduce the operation cost. This paper design a pricing scheme to balance the energy demand and supply based on demand response in smart grid. In the demand side, a Bayesian game is formulated to model the interaction of multiple consumers because each consumer's utility function is private. The utility company announces a regulation price which can change the Bayesian Nash equilibrium and the energy demand of consumers. We develop an algorithm to update the regulation price until the energy demand match the energy supply. Numerical results demonstrate that the algorithm make the regulation price converge to a stable state and balance the energy supply and demand.