Economic impact and market power of strategic aggregators in energy demand networks

This chapter investigates the strategic behavior of aggregators in the three-layered energy demand network optimization problem. Participants of the network are a utility company, who plays a role of energy supply source, multiple aggregators, and a large number of consumers. We suppose that the network will be optimized through price response-based or market-based optimization process. Under this assumption, the main interest of this chapter is in strategic behavior of aggregators. Although the aggregators are an intermediate entity and expected to solve scalability issues arisen in a large-scale optimization problem, our interest is in an economic impact of the aggregators in energy market. In order to formulate strategic behaviors of the aggregators, we focus on the two specific problem settings. In the first problem, the aggregators will try to pursue market power as well as its own benefit. The other considers strategic operations of battery storage by the aggregators. We use numerical case studies and show that the strategic decision making by the aggregators could provide some useful insights in qualitative analysis of large-scale energy demand network.