A hierarchical, market-based, non-cooperative game-theoretic approach to projecting flexible demand-side resources: Towards more realistic demand response-integrated, long-term energy planning models

This paper presents a non-cooperative, zero-sum, symmetric game approach to projecting the flexible demand-side resources to improve the reliability and robustness of long-term strategic energy planning models. A specifically devised distributed algorithm is put forward to determine the unique, pure-strategy Nash equilibrium of a non-cooperative game formulated for the delivery of aggregator-mediated demand response resources, at which no player can yield a higher payoff by deviating from its best-response strategy. The simulation for the operation of renewable energy systems is run over the course of a year. Furthermore, using a metaheuristic-based solution algorithm proposed for the optimal capacity planning of microgrids, the model was satisfactorily applied to the energy infrastructure planning of a test-case system conceptualized for the town of Ohakune, in New Zealand. The simulation results suggest that not only does the proposed market-directed, incentive-based, strategic demand-side management planning framework help elicit further contributions from the customers, which, in turn, reduces the reserve capacity requirements to meet the peak demand, it also guarantees the highest possible payoff for all players of the game. According to the simulation results, the test-case system’s life-cycle cost can be reduced by up to ~29% compared to the case, where no demand response is considered.