Abstract:

 In this talk, we will explore the application of contract theory in addressing critical challenges in energy markets, with a focus on demand–response management and pollution regulation. In demand–response management, a moral hazard framework is utilised to design optimal contracts that incentivise consumers to adjust their energy usage in response to system needs, achieving greater flexibility and efficiency in electricity markets. Extending this approach to a mean-field of consumers highlights the potential for enhanced responsiveness through innovative contract mechanisms. In the context of pollution regulation, we examine incentive schemes for electricity producers to adopt cleaner technologies and reduce emissions. By integrating stochastic control and mean-field game techniques, we derive optimal contracts that balance economic efficiency with environmental sustainability, showcasing significant reductions in pollution levels. Numerical simulations inspired by real-world scenarios validate the effectiveness of these models in promoting sustainable energy practices.