A Game-Theoretic Approach to Energy Trading in the Smart Grid

Abstract

The new and improved smart grid allows energy to flow back from customers into the grid. Customers can sell their excess of energy to the grid or to other customers. While the former has been extensively researched in the literature and is known as Vehicule-to-Grid (V2G) [1], the latter is broadly referred to as energy trading. In this paper, we propose a game theoretic approach that allows customers in the grid to buy energy from other customers offering their surplus at a discounted price. The proposed approach is based on a modified regret matching procedure [2] and enables users to trade energy. Sellers make profit by selling their surplus of energy gathered from renewable resources and stored in energy storage devices such as batteries. Buyers can save on their energy bill by buying cheap energy from their neighbors instead of the grid, therefore decreasing the load on the grid and making use of clean renewable energy. The proposed approach is evaluated through a set of simulations, which show that the proposed approach encourages the use of clean energy and provides energy bill savings to buyers.