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Decentralized local electricity market model using Automated Market Maker

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  • K.C., Bevin
  • Verma, Ashu

Abstract

The desire of prosumers to participate in the markets has led to the setting up of Decentralized Local Electricity Markets (DLEM). These markets are usually confined to a small geographical location, often with a small number of participants. Such markets have very low liquidity for participants to trade, so price discovery becomes a cumbersome process. To solve the issue of market liquidity, this paper introduces a DLEM model where market participants can trade with a Liquidity Pool (LP) created by Energy Storage Units (ESU). The market model provides iteration-free price discovery by using an Automated Market Maker (AMM) protocol, which automatically updates energy price in the LP based on demand–supply balance. The efficiency of AMM is further improved using the concept of concentrated liquidity by restricting the trading range. A network loss compensation method is applied to ensure DLEM transactions do not affect the power contracts already committed. Simulation studies are conducted on IEEE 33 bus and 123 bus distribution networks for various energy demand scenarios to show operation of the proposed market model.

Suggested Citation

  • K.C., Bevin & Verma, Ashu, 2023. "Decentralized local electricity market model using Automated Market Maker," Applied Energy, Elsevier, vol. 334(C).
    • Handle: RePEc:eee:appene:v:334:y:2023:i:c:s0306261923000533
    DOI: 10.1016/j.apenergy.2023.120689
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    References listed on IDEAS

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    Cited by:

    1. Hosseini Dolatabadi, Sayed Hamid & Bhuiyan, Tanveer Hossain & Chen, Yang & Morales, Jose Luis, 2024. "A stochastic game-theoretic optimization approach for managing local electricity markets with electric vehicles and renewable sources," Applied Energy, Elsevier, vol. 368(C).
    2. Nipun Agarwal & Pornpit Wongthongtham & Neerajkumari Khairwal & Kevin Coutinho, 2023. "Blockchain Application to Financial Market Clearing and Settlement Systems," JRFM, MDPI, vol. 16(10), pages 1-19, October.
    3. Sebastián Arias & Adriana M. Santa-Alvarado & Harold Salazar, 2024. "The Impact of a Market Maker in an Electricity Market," Energies, MDPI, vol. 17(16), pages 1-18, August.

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