text: We consider a smart-grid connecting several agents, modeled as stochastic dynamical systems, who may be electricity consumers producers. At each discrete time instant, which may represent a 15 minute interval, each agent may consume generate some quantity of electrical energy. The Independent System Operator (ISO) is given the task of assigning consumptions generations to the agents so as to maximize the sum of the utilities accrued to the agents, subject to the constraint that energy generation equals consumption at each time. This task of coordinating generation and demand has to be accomplished by the ISO without the agents revealing their system states, dynamics, or utility cost functions. We show how and when a simple iterative procedure converges to the optimal solution. The ISO iteratively obtains electricity bids by the agents, and declares the tentative market clearing prices. In response to these prices, the agents submit new bids. On the demand side, the solution yields an optimal demand response for dynamic and stochastic loads. On the generation side, it provides the optimal utilization of stochastically varying renewables such as solar wind, and generation with fossil fuel based generation with dynamic constraints such as ramping rates. Thereby we solve a decentralized stochastic control problem, without agents sharing any information about their system models, states or utility functions.
  @cite_0: Note: Bibliogr. : p. 255-266. Index Reference Record created on 2004-09-07, modified on 2016-08-08
  @cite_8: A new concept of electricity pricing referred to as "spot pricing" is presented. Spot pricing is shown to encompass and achieve more fully the objectives of load management techniques and other rate structures proposed so far. The contribution of this paper is the derivation of optimal spot prices and a discussion of and proposals on a number of implementation issues which arise when the theory of spot pricing is turned into practice. A set of rates related to optimal spot prices are proposed and their applicability is discussed in view of different customer characteristics, metering, and communication costs. The impact of spot pricing on line losses and reactive energy, the quality of supply and rationing is elaborated. Issues related to customer response, utility revenues, investments and generation deregulation are also discussed.
summary: In the setting of the energy market, @cite_0 @cite_8 discuss a general framework for the operation of an electicity grid via the establishment of a marketplace in which the electricity purchases are done on the basis of spot prices. Thus, electrical energy is treated as a commodity which can be bought, sold, and traded, taking into account its time-and space-varying values and costs, and a framework is presented for the establishment of an energy marketplace. Our results can be viewed as providing guidelines for the operation of this marketplace via simple bidding schemes when the agents are nonlinear stochastic dynamical systems. Our scheme maximize the net social utlity.