Coordinating Distributed Energy Resources with Nodal Pricing in Distribution Networks: a Game-Theoretic Approach

We propose a real-time nodal pricing mechanism for cost minimization and voltage control in a distribution network with autonomous distributed energy resources and analyze the resulting market using stochastic game theory. Unlike existing methods, the proposed pricing scheme does not require device-aware centralized coordination or communication between prosumers. By developing new sufficient conditions under which a stochastic game is a Markov potential game, we show that the problem of computing an equilibrium for the proposed model is equivalent to solving a single-agent Markov Decision Process. These new conditions are general and may apply to other applications. We compute the equilibrium for an IEEE test system to empirically demonstrate the effectiveness of the pricing policy.