Defending against strategic adversaries in dynamic pricing markets for smart grids

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Abstract: Dynamic pricing markets in smart grids contain competitive environments in which strategic adversaries can launch cyber-attacks to extract profits from the system. When multiple actors are competing, the disruption of key assets can create large swings in the profitability of each actor by changing the supply and demand dynamics of the underlying system. These swings in profits can be leveraged by an attacker to extract profits from the system. In this paper, we explore the implications of attacks and defenses on market resilience when faced with a strategic profit-seeking adversary. Changes in the market may mitigate or exacerbate the likelihood of cyber-attacks on system assets, and we present a strategy for optimizing defenses to minimize attacks. We also explore the impact of information sharing on system behavior and the potential for collaboration by the system owners to improve resilience. These design principles are exercised on a model of an interconnected electric power grid to show the potential security improvements provided by architectural changes.