A multi-leader-follower game for energy demand-side management

Abstract

A multi-leader-follower game (MLFG) corresponds to a bilevel problem in which the upper level and the lower level are defined by Nash non-cooperative competition among the players acting at the upper level (the leaders) and, at the same time, among the ones acting at the lower level (the followers). MLFGs are known to be complex problems, but they also provide perfect models to describe hierarchical interactions among various actors of real-life problems. In this work, we focus on a class of MLFGs modelling the implementation of demand-side management in an electricity market through price incentives, leading to the so-called Bilevel Demand-Side Management problem (BDSM). Our aim is to propose some innovative reformulations/numerical approaches to efficiently tackle this difficult problem. Our methodology is based on the selection of specific Nash equilibria of the lower level through a precise analysis of the intrinsic characteristics of (BDSM).

Keywords:

• Bilevel optimization
• demand-side management
• energy markets

Acknowledgments

This research benefited from the support of the FMJH Program Gaspard Monge in optimization and operation research, and from the support to this program from EDF. The authors would like to thank the reviewers for their very valuable comments that helped to improve this work. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of the EDF group. Assumptions made within the analysis of this article are not reflective of the position of the EDF group.

Disclosure statement

No potential conflict of interest was reported by the author(s).