Guidelines for realistic grounding of mechanism design in demand response

Paradigm-shifting changes in the electric power industry, such as high renewable energy penetration and advancements in infrastructure technologies, have prompted more focus on demand response (DR). This paper highlights four impediments associated with a realistic implementation of mechanism design for aggregator-coordinated DR, focusing in particular on the Vickrey-Clarke-Groves (VCG) mechanism, and describes the necessary assumptions for a realistic grounding to the implementation of mechanism design in DR. Additionally, we propose a two-stage distributed mechanism in which the agents share the computational burden with the aggregator and faithfully implement their intended computations.