IDEAS home Printed from https://ideas.repec.org/a/eee/enepol/v152y2021ics0301421521001063.html
   My bibliography  Save this article

Devising a trading mechanism with a joint price adjustment for local electricity markets using blockchain. Insights for policy makers

Author

Listed:
  • Oprea, Simona-Vasilica
  • Bâra, Adela

Abstract

The new potential of Distributed Energy Resources (DER), residential consumers, buildings, and prosumers in terms of controllable devices, self-generation, and storage makes them more active in the market encouraged by lower electricity prices. In addition, integrating a higher volume of volatile Renewable Energy Sources (RES) that unstress the public grid by local trading interactions is a desirable target of Local Electricity Markets (LEM). In this paper, we propose a blockchain trading mechanism to simulate the electricity transactions for 11 modern smart houses with more than 300 appliances, 8 roof- or faced-PV systems, and smart-metered 15-min readings that form a small-size community. The electricity generated at the community level lowers the electricity bills and brings benefits for prosumers (sellers) and consumers (buyers). Several trading mechanisms for LEM transactions including auctions such as Uniform Price (UP), Pay-As-Bid (PAB), Generalized Second-Price (GSP), Vickrey-Clark-Groves (VCG) methods are implemented to evaluate the benefits and show their efficiency. After the market is initially cleared, an adjustment coefficient of the price is proposed for both sides (seller and buyer) to enlarge the trading potential at the community level using blockchain technology. It proves to bring excellent results to the LEM participants and enhance trading with outstanding benefits.

Suggested Citation

  • Oprea, Simona-Vasilica & Bâra, Adela, 2021. "Devising a trading mechanism with a joint price adjustment for local electricity markets using blockchain. Insights for policy makers," Energy Policy, Elsevier, vol. 152(C).
    • Handle: RePEc:eee:enepol:v:152:y:2021:i:c:s0301421521001063
    DOI: 10.1016/j.enpol.2021.112237
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301421521001063
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.enpol.2021.112237?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. Mengelkamp, Esther & Gärttner, Johannes & Rock, Kerstin & Kessler, Scott & Orsini, Lawrence & Weinhardt, Christof, 2018. "Designing microgrid energy markets," Applied Energy, Elsevier, vol. 210(C), pages 870-880.
    2. Sikorski, Janusz J. & Haughton, Joy & Kraft, Markus, 2017. "Blockchain technology in the chemical industry: Machine-to-machine electricity market," Applied Energy, Elsevier, vol. 195(C), pages 234-246.
    3. Diestelmeier, Lea, 2019. "Changing power: Shifting the role of electricity consumers with blockchain technology – Policy implications for EU electricity law," Energy Policy, Elsevier, vol. 128(C), pages 189-196.
    4. Riley, John G & Samuelson, William F, 1981. "Optimal Auctions," American Economic Review, American Economic Association, vol. 71(3), pages 381-392, June.
    5. Max R. Blouin & Roberto Serrano, 2001. "A Decentralized Market with Common Values Uncertainty: Non-Steady States," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 68(2), pages 323-346.
    6. Bower, John & Bunn, Derek, 2001. "Experimental analysis of the efficiency of uniform-price versus discriminatory auctions in the England and Wales electricity market," Journal of Economic Dynamics and Control, Elsevier, vol. 25(3-4), pages 561-592, March.
    7. Andoni, Merlinda & Robu, Valentin & Flynn, David & Abram, Simone & Geach, Dale & Jenkins, David & McCallum, Peter & Peacock, Andrew, 2019. "Blockchain technology in the energy sector: A systematic review of challenges and opportunities," Renewable and Sustainable Energy Reviews, Elsevier, vol. 100(C), pages 143-174.
    8. Jesse Yli-Huumo & Deokyoon Ko & Sujin Choi & Sooyong Park & Kari Smolander, 2016. "Where Is Current Research on Blockchain Technology?—A Systematic Review," PLOS ONE, Public Library of Science, vol. 11(10), pages 1-27, October.
    9. Roger B. Myerson, 1981. "Optimal Auction Design," Mathematics of Operations Research, INFORMS, vol. 6(1), pages 58-73, February.
    10. Fanzeres, Bruno & Ahmed, Shabbir & Street, Alexandre, 2019. "Robust strategic bidding in auction-based markets," European Journal of Operational Research, Elsevier, vol. 272(3), pages 1158-1172.
    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. Doumen, Sjoerd C. & Nguyen, Phuong & Kok, Koen, 2022. "Challenges for large-scale Local Electricity Market implementation reviewed from the stakeholder perspective," Renewable and Sustainable Energy Reviews, Elsevier, vol. 165(C).
    2. Oprea, Simona-Vasilica & Bâra, Adela & Diaconita, Vlad, 2022. "A motivational local trading framework with 2-round auctioning and settlement rules embedded in smart contracts for a small citizen energy community," Renewable Energy, Elsevier, vol. 193(C), pages 225-239.
    3. Bâra, Adela & Oprea, Simona-Vasilica, 2024. "Enabling coordination in energy communities: A Digital Twin model," Energy Policy, Elsevier, vol. 184(C).
    4. Lin, Boqiang & Chen, Jiaying & Wesseh, Presley K., 2022. "Peak-valley tariffs and solar prosumers: Why renewable energy policies should target local electricity markets," Energy Policy, Elsevier, vol. 165(C).
    5. Heilmann, Jakob & Wensaas, Marthe & Crespo del Granado, Pedro & Hashemipour, Naser, 2022. "Trading algorithms to represent the wholesale market of energy communities in Norway and England," Renewable Energy, Elsevier, vol. 200(C), pages 1426-1437.
    6. Pastore, Lorenzo Mario & Lo Basso, Gianluigi & Ricciardi, Guido & de Santoli, Livio, 2022. "Synergies between Power-to-Heat and Power-to-Gas in renewable energy communities," Renewable Energy, Elsevier, vol. 198(C), pages 1383-1397.
    7. Faia, Ricardo & Lezama, Fernando & Soares, João & Pinto, Tiago & Vale, Zita, 2024. "Local electricity markets: A review on benefits, barriers, current trends and future perspectives," Renewable and Sustainable Energy Reviews, Elsevier, vol. 190(PA).
    8. Oprea, Simona-Vasilica & Bâra, Adela & Ciurea, Cristian-Eugen, 2022. "A novel cost-revenue allocation computation for the competitiveness of balancing responsible parties, including RES. Insights from the electricity market," Renewable Energy, Elsevier, vol. 199(C), pages 881-894.

    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. Ante, L. & Steinmetz, F. & Fiedler, I., 2021. "Blockchain and energy: A bibliometric analysis and review," Renewable and Sustainable Energy Reviews, Elsevier, vol. 137(C).
    2. Tseng, Fang-Mei & Palma Gil, Eunice Ina N. & Lu, Louis Y.Y., 2021. "Developmental trajectories of blockchain research and its major subfields," Technology in Society, Elsevier, vol. 66(C).
    3. Oprea, Simona-Vasilica & Bâra, Adela & Diaconita, Vlad, 2022. "A motivational local trading framework with 2-round auctioning and settlement rules embedded in smart contracts for a small citizen energy community," Renewable Energy, Elsevier, vol. 193(C), pages 225-239.
    4. Kouhizadeh, Mahtab & Saberi, Sara & Sarkis, Joseph, 2021. "Blockchain technology and the sustainable supply chain: Theoretically exploring adoption barriers," International Journal of Production Economics, Elsevier, vol. 231(C).
    5. Soto, Esteban A. & Bosman, Lisa B. & Wollega, Ebisa & Leon-Salas, Walter D., 2022. "Comparison of net-metering with peer-to-peer models using the grid and electric vehicles for the electricity exchange," Applied Energy, Elsevier, vol. 310(C).
    6. Wang, Longze & Liu, Jinxin & Yuan, Rongfang & Wu, Jing & Zhang, Delong & Zhang, Yan & Li, Meicheng, 2020. "Adaptive bidding strategy for real-time energy management in multi-energy market enhanced by blockchain," Applied Energy, Elsevier, vol. 279(C).
    7. Wang, Longze & Jiao, Shucen & Xie, Yu & Xia, Shiwei & Zhang, Delong & Zhang, Yan & Li, Meicheng, 2022. "Two-way dynamic pricing mechanism of hydrogen filling stations in electric-hydrogen coupling system enhanced by blockchain," Energy, Elsevier, vol. 239(PC).
    8. Neves, Diana & Scott, Ian & Silva, Carlos A., 2020. "Peer-to-peer energy trading potential: An assessment for the residential sector under different technology and tariff availabilities," Energy, Elsevier, vol. 205(C).
    9. Tobias Rösch & Peter Treffinger & Barbara Koch, 2021. "Regional Flexibility Markets—Solutions to the European Energy Distribution Grid—A Systematic Review and Research Agenda," Energies, MDPI, vol. 14(9), pages 1-32, April.
    10. Zhu, Shuai & Song, Malin & Lim, Ming Kim & Wang, Jianlin & Zhao, Jiajia, 2020. "The development of energy blockchain and its implications for China's energy sector," Resources Policy, Elsevier, vol. 66(C).
    11. Otto, Steven & Poe, Gregory L. & Just, David R., 2017. "Formulating and Testing a New Conservation Auction Mechanism in an Experimental Setting," 2017 Annual Meeting, July 30-August 1, Chicago, Illinois 258476, Agricultural and Applied Economics Association.
    12. 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.
    13. Zhou, Yue & Wu, Jianzhong & Song, Guanyu & Long, Chao, 2020. "Framework design and optimal bidding strategy for ancillary service provision from a peer-to-peer energy trading community," Applied Energy, Elsevier, vol. 278(C).
    14. Roth, Tamara & Utz, Manuel & Baumgarte, Felix & Rieger, Alexander & Sedlmeir, Johannes & Strüker, Jens, 2022. "Electricity powered by blockchain: A review with a European perspective," Applied Energy, Elsevier, vol. 325(C).
    15. Matteo Troncia & Marco Galici & Mario Mureddu & Emilio Ghiani & Fabrizio Pilo, 2019. "Distributed Ledger Technologies for Peer-to-Peer Local Markets in Distribution Networks," Energies, MDPI, vol. 12(17), pages 1-19, August.
    16. Nazir Ullah & Waleed S. Alnumay & Waleed Mugahed Al-Rahmi & Ahmed Ibrahim Alzahrani & Hosam Al-Samarraie, 2020. "Modeling Cost Saving and Innovativeness for Blockchain Technology Adoption by Energy Management," Energies, MDPI, vol. 13(18), pages 1-22, September.
    17. Hou, Jianchao & Wang, Che & Luo, Sai, 2020. "How to improve the competiveness of distributed energy resources in China with blockchain technology," Technological Forecasting and Social Change, Elsevier, vol. 151(C).
    18. Yeon-Koo Che & Ian Gale, 1994. "Auctions with budget-constrained buyers: a nonequivalence result," Working Papers (Old Series) 9402, Federal Reserve Bank of Cleveland.
    19. Shunda, Nicholas, 2009. "Auctions with a buy price: The case of reference-dependent preferences," Games and Economic Behavior, Elsevier, vol. 67(2), pages 645-664, November.
    20. ,, 2011. "Manipulative auction design," Theoretical Economics, Econometric Society, vol. 6(2), May.

    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:enepol:v:152:y:2021:i:c:s0301421521001063. 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/locate/enpol .

    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.