In this paper, we consider the demand response problem in smart grid consisting of a retailer and multiple residential consumers, where the retailer determines consumers’ payments based on their power consumption profile. Our aim is to propose a fully distributed algorithm that is able to optimize the aggregate cost, utility, and retailer’s profit simultaneously. To this end, we first formulate the consumer-side trend as a constrained convex optimization problem and propose a fully distributed adaptive diffusion algorithm to solve it. In addition, we design a one-leader N-follower Stackelberg game to model interactions among the retailer and consumers. The proposed framework is able to continuously track the drifts resulting from the changes in the real-time pricing or the consumer preferences. Moreover, it is scalable and does not require network-wide information or rely on central controller. We provide comprehensive simulation results to show the effectiveness of the proposed framework.
