Interruptible Power Estimation and Auxiliary Service Allocation Using Contract Theory and Dynamic Game for Demand Response in Aggregator Business Model

The traditional power market only considers the cost for electricity users, the willingness-to-pay, and the priority of electricity consumption. From the perspective of the electricity industry, only stable power supply, generator equipment set expansion, new power plant construction, and the strengthening of the transmission grid can meet the requirements of electricity users. In recent years, the distributed generation (DG) and energy storage system capacity in microgrid have gradually increased, effectively reducing and suppressing the demand from traditional power sources. In addition, incentive or contractual strategies, such as time-of-use and real-time pricing, can also encourage electricity users to change their electricity consumption behaviors. If the DGs can be integrated into generation aggregators in cooperation with demand response (DR) and efficient load direct/indirect) controls, it can meet the users' demands in auxiliary service (AS) market, as well as achieve a win-win mode for the electricity industry and electricity users. Hence, this study proposes the contract theory (CT) to estimate the interruptible power of the user group (DR aggregator) for DR during peak periods. Then, according to the user group's DR, the dynamic game model (DGM) is used to effectively allocate AS power under the consideration of the DG resource risk situation. In the aggregator business market, experimental results will show that the proposed methods can suppress the use of traditional power sources, effectively activate the proportion of schedulable DG, increase system flexibility, and increase billing charges.