Demand Side Management in the Smart Grid: an Efficiency and Fairness\n Tradeoff

Abstract

We compare two Demand Side Management (DSM) mechanisms, introduced\nrespectively by Mohsenian-Rad et al (2010) and Baharlouei et al (2012), in\nterms of efficiency and fairness. Each mechanism defines a game where the\nconsumers optimize their flexible consumption to reduce their electricity\nbills. Mohsenian-Rad et al propose a daily mechanism for which they prove the\nsocial optimality. Baharlouei et al propose a hourly billing mechanism for\nwhich we give theoretical results: we prove the uniqueness of an equilibrium in\nthe associated game and give an upper bound on its price of anarchy. We\nevaluate numerically the two mechanisms, using real consumption data from Pecan\nStreet Inc. The simulations show that the equilibrium reached with the hourly\nmechanism is socially optimal up to 0.1%, and that it achieves an important\nfairness property according to a quantitative indicator we define. We observe\nthat the two DSM mechanisms avoid the synchronization effect induced by non-\ngame theoretic mechanisms, e.g. Peak/OffPeak hours contracts.\n