Coalitional energy purchasing in the smart grid

Matching demand and supply is recognized as a crucial issue for smart grids, and ICT-based solutions are essential to deliver the infrastructure, algorithms and mechanisms for demand-supply balancing. To date, most work in this area focus on providing users with real time feedback on energy prices and consumption, or on load scheduling of home appliances for individual user consumption. In this paper, we take a complementary approach by exploiting social relationships among consumers to organise them into coalitions of Virtual Electricity Consumers (VECs) that buy electricity as a single customer in order to get a discount on electricity through collective buying. Specifically, we model our problem as a coalitional game and provide an algorithm, based on linear programming, to form VECs. The VECs formed by our algorithm are both efficient (i.e., minimizing the sum of users' payments) and stable (i.e., no user has any incentive to break away). We empirically analyse our approach using real consumption data for a set of households located in UK. Our analysis provides interesting insights into the relationship between structure and stability of VEC's and prices within the electricity market.