Scalable and optimal coalition formation of microgrids in a distribution system

This paper presents an optimal coalition formation mechanism of microgrids in a smart distribution system and analyzes the characteristics from the coalitional game theoretical perspective. Microgrids coalitions can minimize the energy burden and dependency on the utility grid by maximizing intra-coalition energy transfer. A Hierarchical Coalition Formation (HR Coalition) mechanism is designed to form cooperative microgrids by determining optimal coalition among microgrids. The optimality is realized by reaching a state of cooperative equilibrium where sticking to the associated coalitions is the best response for all microgirds. We argued that the proposed HR Coalition scheme contains the optimality property and is proved to be scalable enough to participate in real-time operation. An equivalent pricing mechanism is also designed to support the coalition formation. Conducted simulation results back the claims while presenting the effectiveness of the proposed method in terms of forming optimal coalition and minimizing loss in distribution system.