Operating reserves provision from residential users through load aggregators in smart grid: A game theoretic approach

With the development of demand-side management technologies in the future smart grid, residential users possess great potential to provide ancillary services like operating reserves to the power system. However, the integration of residential users still poses significant challenges due to their huge number and relatively small power loads. In this paper, we introduce a hierarchical structure of users providing operating reserves to the power system through load aggregators. In the lower level of this structure, we propose an incentive compatible mechanism for user aggregation, thus achieving social optimality and eliciting truthful private information from users. In the upper level of this structure, load aggregators represent the users to bid in an operating reserve market which is modeled by the conjectured supply function approach. We analyze the resulting game, prove the existence and uniqueness of the game equilibrium, and propose a distributed algorithm to reach it. Simulation results validate our framework and show that by aggregating residential users to participate in the reserve provision service, both the electric utility operator and residential users can benefit financially.