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April 3, 2013: Prof. Rahul Jain, USC

As the world moves towards a greater fraction of renewable energy in the total energy mix, a smarter grid and electricity infrastructure has become imperative. This introduces many new problems at various levels. For one, renewable energy generators can't participate in the future electricity markets without exposing themselves to too much risk. Thus, new market mechanisms and architectures are going to be needed. There would be entities called `aggregators' who would buy power from the renewable energy generators, and then sell it in the future markets, assuming any risk of a shortfall. Motivated by this, we introduce auction mechanisms (that the aggregators can use) for stochastic resources, such as wind power which can only be supplied by the seller with a certain probability. The goal of the `aggregator' is to elicit these probability distributions truthfully. We propose two mechanisms, a stochastic VCG mechanism, and a stochastic shortfall penalty (SSP) mechanism, both of which we show to be incentive-compatible. In the second part of the talk, we take another look at the Locational Marginal Pricing (LMP) mechanism that is used daily by almost all the Independent System Operators (ISOs) to determine generation and supply schedules. It is part of the folklore in Power System Economics that an equilibrium exists in the LMP mechanism. In this talk, we first show that contrary to conventional wisdom, a Nash equilibrium (NE) may not exist in the LMP mechanism. We then introduce two power network second-price (PNSP) mechanisms, one single-sided and another double-sided. In either case, we show the existence of an efficient NE. The double-sided PNSP mechanism however, is not budget-balanced, and there is room for more suitable mechanisms. The talk will give a high level view of various market and pricing problems related to the smart grid including the unit commitment problem and demand response.

Rahul Jain is the K. C. Dahlberg Early Career Chair and an Assistant Professor in the EE & ISE Departments at the University of Southern California, Los Angeles, CA. He received his B.Tech from IIT Kanpur, and an MA in Statistics and a PhD in EECS from the University of California, Berkeley. Prior to joining USC in Fall 2008, he was at the IBM T J Watson Research Center, Yorktown Heights, NY. He is a recipient of the NSF CAREER award in 2010, the ONR Young Investigator award in 2012, an IBM Faculty award in 2010, the James H. Zumberge Faculty Research and Innovation Award in 2009 and a Best paper award at a couple of conferences. His interests span game theory and network economics, queueing theory, stochastic models, optimization and learning with applications to communication networks and power systems.