A Price-Based Approach to Control of Networked Distributed Energy Resources

We introduce a framework for controlling the energy provided or absorbed by distributed energy resources (DERs) in power distribution networks. In this framework, there is a set of agents referred to as aggregators that interact with the wholesale electricity market, and through some market-clearing mechanism, are requested (and will be compensated for) to provide (or absorb) certain amount of active (or reactive) power over some period of time. In order to fulfill the request, each aggregator interacts with a set of DERs and offers them some price per unit of active (or reactive) power they provide (or absorb); the objective is for the aggregator to design a pricing strategy for incentivizing DERs to change its active (or reactive) power consumption (or production) so as they collectively provide the amount that the aggregator has been asked for. In order to make a decision, each DER uses the price information provided by the aggregator and some estimate of the average active (or reactive) power that neighboring DERs can provide computed through some exchange of information among them; this exchange is described by a connected undirected graph. The focus is on the DER strategic decision-making process, which we cast as a game. In this context, we provide sufficient conditions on the aggregator's pricing strategy under which this game has a unique Nash equilibrium. Then, we propose a distributed iterative algorithm that adheres to the graph that describes the exchange of information between DERs that allows them to seek for this Nash equilibrium. We illustrate our results through several numerical simulations.