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The pursuit of sustainability motivates microgrids that depend on distributedresources to produce more renewable energies. An efficient operation andplanning relies on a holistic framework that takes into account theinterdependent decision-making of the generators of the existing power gridsand the distributed resources of the microgrid in the integrated system. Tothis end, we use a Stackelberg game-theoretic framework to study theinteractions between generators (leaders) and microgrids (followers). Entitieson both sides make strategic decisions on the amount of power generation tomaximize their payoffs. Our framework not only takes into account the economicfactors but also incorporates the stability and efficiency of the smart grid,such as the power flow constraints and voltage angle regulations. We developthree update schemes for both generators and microgrids, respectively, andamong which a fully distributed algorithm enabled by phasor measurement unitsis presented. The distributed algorithm merely requires the information ofvoltage angles at local buses for updates, and its convergence to the uniqueequilibrium is shown. We further develop the implementation architectures ofthe update schemes in the smart grid. Finally, case studies are used tocorroborate the effectiveness of the proposed algorithms.

A Stackelberg Game Approach for Two-Level Distributed Energy Management in Smart Grids