Designing a decentralized peer-to-peer energy market for an active distribution network considering loss and transaction fee allocation, and fairness

Transactive energy management (TEM) in smart grids is a promising approach for enhancing the participation of consumers in managing their energies and developing decentralized energy market models using peer-to-peer (P2P) transactions. The present paper designs and models a fully decentralized P2P energy market considering the technical constraints of the physical electricity network to redesign electricity markets as consumer-centric markets. As the sellers and buyers trade energy via the electricity grid, allocating power losses and transaction fees to players in P2P transactions is of utmost significance. The proposed market allows prosumers to engage directly in bilateral energy trading without requiring intermediaries. In addition to local P2P markets, the buyer prosumers can purchase energy from the upstream market and participate in the demand response (DR) program during hours of local generation shortage. A fairness index is applied to evaluate the players’ satisfaction with fairness and participation in the proposed market. Finally, an alternating direction method of multipliers (ADMM) is utilized to clear the proposed decentralized market. Numerical studies are performed on a standard IEEE 13-bus distribution network with multiple prosumers. The simulation results verify the effectiveness and feasibility of the proposed decentralized market and its clearing approach.