SLA-Mechanisms for Electricity Trading under Volatile Supply and Varying Criticality of Demand

• DOI: 10.5555/3091125.3091389
• Publication Date: 2017-05-08
• Authors: Georgios Methenitis; Michael Kaisers; Han La Poutré
• Keywords: Incentive compatibility

The increasing adoption of renewable power generation makes volatile quantities electricity available, the delivery which cannot be guaranteed, if sold. However, not sold, might need to curtailed, thus foregoing potential profits. In this paper we adapt service level agreements (SLAs) for future smart grid, where will primarily depend on and distributed sources, buyers' ability cope with uncertainty may vary significantly. We propose a contracting framework through SLAs allocate uncertain buyers varying preferences. These comprise quantity, reliability price. define characterization value degradation tolerant critical regards (generalizing Value Lost Load, VoLL). consider two mechanisms (sequential second-price auction VCG) that based buyer bids. further study incentive compatibility proposed mechanisms, show both ensure no has an misreport its valuation. experimentally compare their performance demonstrate VCG dominates alternative allocations, while vastly improves efficiency system when compared baseline allocation considering only VoLL. This article lays ground work energy trading under uncertainty, thereby contributing essential component grid.