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DOE OSTI · 2998142

Game Theory Approaches for System-level Incentive Design

Wang, Wei [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)]·Li, Liping [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)]·Tarufelli, Brittany L. [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)]·Newman, Sarah F. [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)]·Ramachandran, Thiagarajan [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)]
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Abstract

This report presents a generalized Stackelberg game framework for designing and evaluating financial incentives that enhance power system resilience through strategic deployment of distributed energy resources(DERs) under various contingencies. The proposed approach addresses the challenge of coordinating individual community investment decisions to meet system-wide resilience objectives. The framework is demonstrated in a three-community test system subjected to two transmission contingency scenarios: inter-community line failure (Case 1) and complete main grid disconnection (Case 2). In both cases, three incentive levels are compared: a Base case with no financial incentives, and low and high incentive cases. In Case 1, the Base case (no incentives) results in a total installed DER capacity of 217.2 MW, with no load shedding due to alternative routing, but community costs remain high. Increasing incentives raises DER deployment to 286.9 MW, lowers aggregate community costs by $22M annually, and completely avoids the need for costly new transmission line construction. In Case 2, the Base case results in 24.3 MWh of unserved load; introducing incentives eliminates all load shedding and ensures up to 89 MWh of battery storage is available for emergency reserve. These results demonstrate that targeted incentives can dramatically improve grid resilience and cost-effectiveness. The framework thus offers policymakers and system planners a robust tool to quantify and compare the effectiveness of incentive programs for multi-community transmission networks behavior, system resilience, and economic efficiency.

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24 POWER TRANSMISSION AND DISTRIBUTIONbilevel optimizationdistributed energy resourcesincentive designpower system resilienceStackberg game theorytransmission contingencies

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Wang, Wei [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)], Li, Liping [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)], Tarufelli, Brittany L. [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)], Newman, Sarah F. [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)], Ramachandran, Thiagarajan [Pacific Northwest National Laboratory (PNNL), Richland, WA (United States)]. 2025-09-30. Game Theory Approaches for System-level Incentive Design. https://doi.org/10.2172/2998142

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