Game Theory Modeling of Energy Systems

Game theory is a theoretical framework to analyze the interaction of rational decision-makers in a system. Game theory is an effective tool to investigate real-world scenarios with multiple stakeholders interacting with each other. For that reason, game theory has become an essential tool to analyze modern energy systems. Unlike traditional energy systems with centralized decision-making authorities, modern energy systems include markets, decentralized technologies, and multiple stakeholders who act independently in the system. Game theory has been used as a tool that enables the researchers to investigate the independent decision-making of stakeholders in energy systems. Game theory is an effective tool for developing models that provide a better understanding of real-world scenarios compared to centralized models developed in the past. Game theory has been used in different areas of energy system analysis including the optimum design and control of smart energy systems and microgrids. Additionally, game theory modeling has been used to address new challenges faced by energy system operators, and decision-makers such as electric vehicle charging, hybrid energy system planning, generation expansion planning, and energy policy issues. A game theory framework, however, has certain limits when it is used for modeling real-world problems. The primary limits of game theory modeling are solution complexity and assumptions needed to develop a game model. Both these limits may require simplification of a game model, which limits the researchers’ ability to capture all aspects of a complex real-world energy system with multiple stakeholders.