Game Theory

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  • Topic: Game theory, Electric power transmission, Electricity distribution
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Game Theoretic Methods for the Smart Grid
Walid Saad1 , Zhu Han2 , H. Vincent Poor3 , and Tamer Basar4 ¸ 1 2

Electrical and Computer Engineering Department, University of Miami, Coral Gables, FL, USA, email: Electrical and Computer Engineering Department, University of Houston, Houston, TX, USA, email: 3 Electrical Engineering Department, Princeton University, Princeton, NJ, USA, email: 4 Coordinated Science Laboratory, University of Illinois at Urbana-Champaign, USA, email:

arXiv:1202.0452v1 [cs.IT] 2 Feb 2012

Abstract The future smart grid is envisioned as a large-scale cyber-physical system encompassing advanced power, communications, control, and computing technologies. In order to accommodate these technologies, it will have to build on solid mathematical tools that can ensure an efficient and robust operation of such heterogeneous and large-scale cyberphysical systems. In this context, this paper is an overview on the potential of applying game theory for addressing relevant and timely open problems in three emerging areas that pertain to the smart grid: micro-grid systems, demand-side management, and communications. In each area, the state-of-the-art contributions are gathered and a systematic treatment, using game theory, of some of the most relevant problems for future power systems is provided. Future opportunities for adopting game theoretic methodologies in the transition from legacy systems toward smart and intelligent grids are also discussed. In a nutshell, this article provides a comprehensive account of the application of game theory in smart grid systems tailored to the interdisciplinary characteristics of these systems that integrate components from power systems, networking, communications, and control.

This work was supported in part by the U.S. National Science Foundation under Grants CNS-09-05398, CNS-09-05086, CCF-10-16671, DMS11-18605, CNS-1117560, ECCS-1028782, CNS-0953377, and CNS-0905556, in part by the Qatar National Research Fund under grant NPRP 4 - 347 - 2 - 127, and in part by the U.S. Department of Energy (DOE) under grant number de-sc0003879 and by the U.S. Air Force Office of Scientific Research (AFOSR) under grant number MURI FA9550-09-1-0249.


I. I NTRODUCTION AND MOTIVATION The smart grid is envisioned to be a large-scale cyber-physical system that can improve the efficiency, reliability, and robustness of power and energy grids by integrating advanced techniques from various disciplines such as power systems, control, communications, signal processing, and networking. Inherently, the smart grid is a power network composed of intelligent nodes that can operate, communicate, and interact, autonomously, in order to efficiently deliver power and electricity to their consumers. This heterogeneous nature of the smart grid motivates the adoption of advanced techniques for overcoming the various technical challenges at different levels such as design, control, and implementation. In this respect, game theory is expected to constitute a key analytical tool in the design of the future smart grid, as well as large-scale cyber-physical systems. Game theory is a formal analytical as well as conceptual framework with a set of mathematical tools enabling the study of complex interactions among independent rational players. For several decades, game theory has been adopted in a wide number of disciplines ranging from economics and politics to psychology [1]. More recently, game theory has also become a central tool in the design and analysis of communication systems [2]. The proliferation of advanced technologies and services in smart grid systems implies that disciplines such as game theory will naturally become a prominent tool in the design and analysis of smart grids. In particular, there is a need to deploy novel models and algorithms that can capture the following characteristics of the emerging smart grid:...
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