Multi-stage stackelberg game approach for colocation datacenter demand response

There have been many recent studies on the Demand Response (DR) of Datacenters (DCs). Nonetheless, (i) DR of Colocation Datacenters (CDCs), and (ii) the role of Demand Response Provider (CSP) have been largely overlooked. CDCs differ from big owner-operated DCs in that the operator has no control over their tenants, and thus, requiring a mechanism for the operator to give tenants incentives to reduce their electricity usage. CSP uses compensation price as a guidance for customers' response. To fill the gap, we propose an incentive mechanism for CDC DR that studies the interaction between the CSP, CDCs and tenants. Firstly, the strategic behaviors of these interactions are formulated as a three-stage Stackelberg game which contains a separate problem at each stage. In Stage I, the CSP solves an optimal compensation pricing problem. In Stage II, each CDC operator finds its own optimal procurement and reward strategy. In Stage III, the optimal tenants' energy reduction is calculated. Secondly, we examine both exact and approximate solution at Stage II, and propose an efficient algorithm to obtain the optimal CSP price in Stage I. Finally, the extensive numerical analysis (a) shows that the CLT-based approximation achieves similar solutions compared to the exact analysis, and (b) illustrates the comparisons between the optimal CSP individual cost and the social cost.