Incentivizing reliability in demand-side response

Hongyao Ma, Valentin Robu, N. Li, David C. Parkes

Research output: Contribution to journalConference articleScientificpeer-review

20 Citations (Scopus)


We study the problem of incentivizing reliable demand-response in modern electricity grids. Each agent is uncertain about her future ability to reduce demand and unreliable. Agents who choose to participate in a demand-response scheme may be paid when they respond and penalized otherwise. The goal is to reliably achieve a demand reduction target while selecting a minimal set of agents from those willing to participate. We design incentivealigned, direct and indirect mechanisms. The direct mechanism elicits both response probabilities and costs, while the indirect mechanism elicits willingness to accept a penalty in the case of non-response. We benchmark against a spot auction, in which demand reduction is purchased from agents when needed. Both the direct and indirect mechanisms achieve the reliability target in a dominant-strategy equilibrium, select a small number of agents to prepare, and do so at low cost and with much lower variance in payments than the spot auction.

Original languageEnglish
Pages (from-to)352-358
Number of pages7
JournalIJCAI International Joint Conference on Artificial Intelligence
Publication statusPublished - 1 Jan 2016
Externally publishedYes
Event25th International Joint Conference on Artificial Intelligence, IJCAI 2016 - New York, United States
Duration: 9 Jul 201615 Jul 2016


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