A Stackelberg game approach for demand response management of multi-microgrids with overlapping sales areas

Microgrids are increasingly participating directly in the electricity market as sellers in order to fulfill the power demand in specific regions. In this study, we consider a demand response management model for multi-microgrids and multi-users, with overlapping sales areas. We construct a Stackelberg game model of microgrids and users, and then analyze the equilibrium strategies systematically. As such, we prove that there is a unique Stackelberg equilibrium solution for the game. In equilibrium, the electricity price strategies of the microgrids and the demand strategies of the users achieve a balance. Furthermore, we propose a numerical algorithm, supported by a simulation, to compute the equilibrium solution and give the proof of convergence.