Korean Energy Economic Review ISSN:1599-7057(Print) 에너지경제연구

The success of the smart grid, a new power networking technology toenhance the efficiency in electric power generation, distribution andconsumption as a modern industry infrastructure, depends upon theintelligent interaction among its constituents. The microgrid, one of theconstituents, plays a critical role in its flexible networking and efficientpower generation. This paper studies the decision-making and conditionson purchase and sales of power on the mutual contract with a powergenerator or a distributor in the upper layer of the network in orderto deal with the power deficiency and surplus in a microgrid. From thecost functions of the two parties, their decision-making models areproposed, and Nash equilibrium is reduced as a non-cooperative gamemodel. The solution shows the relationship between the price involved inpower transaction and the power generation in a microgrid, which canbe used for policies in promoting the microgrid.