A Stochastic Stackelberg Game Framework for Demand-side Participation in the Reserve Market

In this paper, we consider a scenario where each aggregator represents a group of demand-side users to participate in the reserve market. The competition among aggregators and the conventional thermal power plant (TPP) is analyzed using game theoretic methods. In consideration of the possible uncertainty about market information for aggregators, a stochastic Stackelberg game model is proposed, where aggregators act as multiple leaders and the TPP acts as the follower. Existence and uniqueness of the stochastic Stackelberg equilibrium is further derived, and a distributed algorithm is developed to approximate it. Our simulation results validate our proposed framework and demonstrate that demand-side participation in the reserve market can significantly reduce the total system cost.