IDEAS home Printed from https://ideas.repec.org/a/eee/appene/v325y2022ics0306261922011904.html
   My bibliography  Save this article

Optimal trading mechanism for prosumer-centric local energy markets considering deviation assessment

Author

Listed:
  • Yang, Peiwen
  • Fang, Debin
  • Wang, Shuyi

Abstract

Local energy markets with integrated distributed power prosumers who can produce and consume renewable energy are gradually becoming prosperous with the acceleration of the carbon neutrality process. It is crucial to explore optimal trading mechanism for prosumer-centric local energy markets considering deviation assessment due to the volatility of renewable energy. This study proposed a novel distributed power agency trading (DPAT) mechanism considering deviation assessment based on dynamic game theory, which is formulated by adopting a bilevel Stackelberg model whereby prosumers at lower levels optimize both electricity consumption and pricing strategies considering their expectations of the trading price. Specifically, when the purchase price offered by an agent is higher than the price the prosumer expected, the latter, as a buyer, will select the external market direct trading (EMDT) value. The subgame Nash equilibrium can be derived by nonlinear optimization theory, which demonstrates that prosumer equilibrium price equal to the agent, but equilibrium consumption strategies decrease linearly with aggregator and external market prices, where the former increases linearly with the latter. Furthermore, to explore prosumer’ mechanism selection preference at different times in the day when considering deviation assessment, this study conducted simulations based on actual data from the spot market. The results show that prosumers prefer the DPAT mechanism during peak load hours at noon and the EMDT mechanism during other periods of operation. Additionally, prosumers prefer the DPAT mechanism from the perspective of environmental benefits as it provides more than 8.8% carbon reduction compared to EMDT. This study can guide local energy market to establish optimal trading mechanisms and prosumers to develop optimal trading strategies, and promote achievement of regional carbon neutrality goals.

Suggested Citation

  • Yang, Peiwen & Fang, Debin & Wang, Shuyi, 2022. "Optimal trading mechanism for prosumer-centric local energy markets considering deviation assessment," Applied Energy, Elsevier, vol. 325(C).
    • Handle: RePEc:eee:appene:v:325:y:2022:i:c:s0306261922011904
    DOI: 10.1016/j.apenergy.2022.119933
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0306261922011904
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.apenergy.2022.119933?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hirsch, Adam & Parag, Yael & Guerrero, Josep, 2018. "Microgrids: A review of technologies, key drivers, and outstanding issues," Renewable and Sustainable Energy Reviews, Elsevier, vol. 90(C), pages 402-411.
    2. Jiang, Aihua & Yuan, Huihong & Li, Delong, 2021. "Energy management for a community-level integrated energy system with photovoltaic prosumers based on bargaining theory," Energy, Elsevier, vol. 225(C).
    3. Li, Ruizhi & Yan, Xiaohe & Liu, Nian, 2022. "Hybrid energy sharing considering network cost for prosumers in integrated energy systems," Applied Energy, Elsevier, vol. 323(C).
    4. Bruck, Maira & Sandborn, Peter & Goudarzi, Navid, 2018. "A Levelized Cost of Energy (LCOE) model for wind farms that include Power Purchase Agreements (PPAs)," Renewable Energy, Elsevier, vol. 122(C), pages 131-139.
    5. Mashlakov, Aleksei & Pournaras, Evangelos & Nardelli, Pedro H.J. & Honkapuro, Samuli, 2021. "Decentralized cooperative scheduling of prosumer flexibility under forecast uncertainties," Applied Energy, Elsevier, vol. 290(C).
    6. Roslan, M.F. & Hannan, M.A. & Jern Ker, Pin & Begum, R.A. & Indra Mahlia, TM & Dong, Z.Y., 2021. "Scheduling controller for microgrids energy management system using optimization algorithm in achieving cost saving and emission reduction," Applied Energy, Elsevier, vol. 292(C).
    7. Catherine Mitchell, 2016. "Momentum is increasing towards a flexible electricity system based on renewables," Nature Energy, Nature, vol. 1(2), pages 1-6, February.
    8. Julianne DeAngelo & Inês Azevedo & John Bistline & Leon Clarke & Gunnar Luderer & Edward Byers & Steven J. Davis, 2021. "Energy systems in scenarios at net-zero CO2 emissions," Nature Communications, Nature, vol. 12(1), pages 1-10, December.
    9. Khorasany, Mohsen & Shokri Gazafroudi, Amin & Razzaghi, Reza & Morstyn, Thomas & Shafie-khah, Miadreza, 2022. "A framework for participation of prosumers in peer-to-peer energy trading and flexibility markets," Applied Energy, Elsevier, vol. 314(C).
    10. Thomas Morstyn & Niall Farrell & Sarah J. Darby & Malcolm D. McCulloch, 2018. "Using peer-to-peer energy-trading platforms to incentivize prosumers to form federated power plants," Nature Energy, Nature, vol. 3(2), pages 94-101, February.
    11. Raya-Armenta, Jose Maurilio & Bazmohammadi, Najmeh & Avina-Cervantes, Juan Gabriel & Sáez, Doris & Vasquez, Juan C. & Guerrero, Josep M., 2021. "Energy management system optimization in islanded microgrids: An overview and future trends," Renewable and Sustainable Energy Reviews, Elsevier, vol. 149(C).
    12. Yael Parag & Benjamin K. Sovacool, 2016. "Electricity market design for the prosumer era," Nature Energy, Nature, vol. 1(4), pages 1-6, April.
    13. Chen, Tengpeng & Cao, Yuhao & Qing, Xinlin & Zhang, Jingrui & Sun, Yuhao & Amaratunga, Gehan A.J., 2022. "Multi-energy microgrid robust energy management with a novel decision-making strategy," Energy, Elsevier, vol. 239(PA).
    14. Xu, Zhirong & Yang, Ping & Zheng, Chengli & Zhang, Yujia & Peng, Jiajun & Zeng, Zhiji, 2018. "Analysis on the organization and Development of multi-microgrids," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2204-2216.
    15. Zhou, Yue & Wu, Jianzhong & Long, Chao, 2018. "Evaluation of peer-to-peer energy sharing mechanisms based on a multiagent simulation framework," Applied Energy, Elsevier, vol. 222(C), pages 993-1022.
    16. Yang, Jun & Su, Changqi, 2021. "Robust optimization of microgrid based on renewable distributed power generation and load demand uncertainty," Energy, Elsevier, vol. 223(C).
    17. Ciulla, G. & D’Amico, A. & Di Dio, V. & Lo Brano, V., 2019. "Modelling and analysis of real-world wind turbine power curves: Assessing deviations from nominal curve by neural networks," Renewable Energy, Elsevier, vol. 140(C), pages 477-492.
    18. Galen Barbose & Andrew J. Satchwell, 2020. "Benefits and costs of a utility-ownership business model for residential rooftop solar photovoltaics," Nature Energy, Nature, vol. 5(10), pages 750-758, October.
    19. Siano, Pierluigi & Sarno, Debora, 2016. "Assessing the benefits of residential demand response in a real time distribution energy market," Applied Energy, Elsevier, vol. 161(C), pages 533-551.
    20. Cao, GangCheng & Fang, Debin & Wang, Pengyu, 2021. "The impacts of social learning on a real-time pricing scheme in the electricity market," Applied Energy, Elsevier, vol. 291(C).
    21. Grimm, Veronika & Orlinskaya, Galina & Schewe, Lars & Schmidt, Martin & Zöttl, Gregor, 2021. "Optimal design of retailer-prosumer electricity tariffs using bilevel optimization," Omega, Elsevier, vol. 102(C).
    22. Chen, Yang & Park, Byungkwon & Kou, Xiao & Hu, Mengqi & Dong, Jin & Li, Fangxing & Amasyali, Kadir & Olama, Mohammed, 2020. "A comparison study on trading behavior and profit distribution in local energy transaction games," Applied Energy, Elsevier, vol. 280(C).
    23. Botelho, D.F. & Dias, B.H. & de Oliveira, L.W. & Soares, T.A. & Rezende, I. & Sousa, T., 2021. "Innovative business models as drivers for prosumers integration - Enablers and barriers," Renewable and Sustainable Energy Reviews, Elsevier, vol. 144(C).
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Wang, Dongxue & Fan, Ruguo & Yang, Peiwen & Du, Kang & Xu, Xiaoxia & Chen, Rongkai, 2024. "Research on floating real-time pricing strategy for microgrid operator in local energy market considering shared energy storage leasing," Applied Energy, Elsevier, vol. 368(C).
    2. Goitia-Zabaleta, Nerea & Milo, Aitor & Gaztañaga, Haizea & Fernandez, Elvira, 2023. "Two-stage centralised management of Local Energy Market for prosumers integration in a community-based P2P," Applied Energy, Elsevier, vol. 348(C).
    3. Meng, Yuxiang & Ma, Gang & Yao, Yunting & Li, Hao, 2024. "Nash bargaining based integrated energy agent optimal operation strategy considering negotiation pricing for tradable green certificate," Applied Energy, Elsevier, vol. 356(C).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Siripha Junlakarn & Phimsupha Kokchang & Kulyos Audomvongseree, 2022. "Drivers and Challenges of Peer-to-Peer Energy Trading Development in Thailand," Energies, MDPI, vol. 15(3), pages 1-25, February.
    2. Zhou, Yuekuan & Lund, Peter D., 2023. "Peer-to-peer energy sharing and trading of renewable energy in smart communities ─ trading pricing models, decision-making and agent-based collaboration," Renewable Energy, Elsevier, vol. 207(C), pages 177-193.
    3. Ma, Li & Wang, Lingfeng & Liu, Zhaoxi, 2021. "Multi-level trading community formation and hybrid trading network construction in local energy market," Applied Energy, Elsevier, vol. 285(C).
    4. Maarten Wolsink, 2020. "Framing in Renewable Energy Policies: A Glossary," Energies, MDPI, vol. 13(11), pages 1-31, June.
    5. Yildizbasi, Abdullah, 2021. "Blockchain and renewable energy: Integration challenges in circular economy era," Renewable Energy, Elsevier, vol. 176(C), pages 183-197.
    6. Filipe Bandeiras & Álvaro Gomes & Mário Gomes & Paulo Coelho, 2023. "Exploring Energy Trading Markets in Smart Grid and Microgrid Systems and Their Implications for Sustainability in Smart Cities," Energies, MDPI, vol. 16(2), pages 1-41, January.
    7. Javier Parra-Domínguez & Esteban Sánchez & Ángel Ordóñez, 2023. "The Prosumer: A Systematic Review of the New Paradigm in Energy and Sustainable Development," Sustainability, MDPI, vol. 15(13), pages 1-44, July.
    8. Azim, M. Imran & Tushar, Wayes & Saha, Tapan K. & Yuen, Chau & Smith, David, 2022. "Peer-to-peer kilowatt and negawatt trading: A review of challenges and recent advances in distribution networks," Renewable and Sustainable Energy Reviews, Elsevier, vol. 169(C).
    9. Sousa, Tiago & Soares, Tiago & Pinson, Pierre & Moret, Fabio & Baroche, Thomas & Sorin, Etienne, 2019. "Peer-to-peer and community-based markets: A comprehensive review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 104(C), pages 367-378.
    10. Sophie Adams & Donal Brown & Juan Pablo Cárdenas Álvarez & Ruzanna Chitchyan & Michael J. Fell & Ulf J. J. Hahnel & Kristina Hojckova & Charlotte Johnson & Lurian Klein & Mehdi Montakhabi & Kelvin Say, 2021. "Social and Economic Value in Emerging Decentralized Energy Business Models: A Critical Review," Energies, MDPI, vol. 14(23), pages 1-29, November.
    11. Younes Zahraoui & Tarmo Korõtko & Argo Rosin & Hannes Agabus, 2023. "Market Mechanisms and Trading in Microgrid Local Electricity Markets: A Comprehensive Review," Energies, MDPI, vol. 16(5), pages 1-52, February.
    12. Henri van Soest, 2018. "Peer-to-peer electricity trading: A review of the legal context," Competition and Regulation in Network Industries, , vol. 19(3-4), pages 180-199, September.
    13. Bożena Gajdzik & Magdalena Jaciow & Radosław Wolniak & Robert Wolny & Wieslaw Wes Grebski, 2023. "Energy Behaviors of Prosumers in Example of Polish Households," Energies, MDPI, vol. 16(7), pages 1-26, March.
    14. Michael H. Spiegel & Eric M. S. P. Veith & Thomas I. Strasser, 2020. "The Spectrum of Proactive, Resilient Multi-Microgrid Scheduling: A Systematic Literature Review," Energies, MDPI, vol. 13(17), pages 1-37, September.
    15. Arnob Das & Susmita Datta Peu & Md. Abdul Mannan Akanda & Abu Reza Md. Towfiqul Islam, 2023. "Peer-to-Peer Energy Trading Pricing Mechanisms: Towards a Comprehensive Analysis of Energy and Network Service Pricing (NSP) Mechanisms to Get Sustainable Enviro-Economical Energy Sector," Energies, MDPI, vol. 16(5), pages 1-27, February.
    16. Kobashi, Takuro & Yoshida, Takahiro & Yamagata, Yoshiki & Naito, Katsuhiko & Pfenninger, Stefan & Say, Kelvin & Takeda, Yasuhiro & Ahl, Amanda & Yarime, Masaru & Hara, Keishiro, 2020. "On the potential of “Photovoltaics + Electric vehicles” for deep decarbonization of Kyoto’s power systems: Techno-economic-social considerations," Applied Energy, Elsevier, vol. 275(C).
    17. Wu, Jiechen & Hu, Junjie & Ai, Xin & Zhang, Zhan & Hu, Huanyu, 2019. "Multi-time scale energy management of electric vehicle model-based prosumers by using virtual battery model," Applied Energy, Elsevier, vol. 251(C), pages 1-1.
    18. Lin Herenčić & Perica Ilak & Ivan Rajšl, 2019. "Effects of Local Electricity Trading on Power Flows and Voltage Levels for Different Elasticities and Prices," Energies, MDPI, vol. 12(24), pages 1-19, December.
    19. Chakraborty, Shantanu & Baarslag, Tim & Kaisers, Michael, 2020. "Automated peer-to-peer negotiation for energy contract settlements in residential cooperatives," Applied Energy, Elsevier, vol. 259(C).
    20. Villanueva-Rosario, Junior Alexis & Santos-García, Félix & Aybar-Mejía, Miguel Euclides & Mendoza-Araya, Patricio & Molina-García, Angel, 2022. "Coordinated ancillary services, market participation and communication of multi-microgrids: A review," Applied Energy, Elsevier, vol. 308(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:appene:v:325:y:2022:i:c:s0306261922011904. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/wps/find/journaldescription.cws_home/405891/description#description .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.