Vickrey-Clark-Groves-Based Method for Eradicating Deceptive Behaviors in Demand Response Transactions

Demand response transactions between electric consumers, load aggregators, and the distribution network manager based on the “combination of price and incentive” are feasible and efficient. However, the incentive payment of demand response is quantified based on private information, which gives the electric consumers and load aggregators the possibility of defrauding illegitimate interests by declaring false information. This paper proposes a method based on Vickrey-Clark-Groves (VCG) theory to prevent electric consumers and load aggregators from taking illegitimate interests through deceptive declaration in the demand response transactions. Firstly, a demand response transaction framework with the price-and-incentive combined mode is established to illustrate the deceptive behavior in the demand response transaction. Then, the idea for eradicating deceptive declarations based on VCG theory is given, and a detailed VCG-based mathematical model is constructed following the demand response transaction framework. Further, the proofs of incentive compatibility, individual rationality, cost minimization, and budget balance of the proposed VCG-based method are given. Finally, a modified IEEE 33-node system and a modified IEEE 123-node system are used to illustrate and validate the proposed method.