A hierarchical and decentralized energy management system for peer-to-peer energy trading

Abstract

This paper presents a novel Hierarchical and Decentralized Energy Management System which facilitates the Peer to Peer energy trading between prosumers in the community by coordinating the operation of distributed Home Battery Storage Systems and shiftable home appliances in a decentralized way to achieve a further reduction in the household energy costs for each house, compared to being operated individually (i.e. not being a part of the community). The hierarchical system consists of three levels: Selection level, Peer to Peer Management level, and Home Management level. First, the daily energy cost of each household is optimized individually using the lower layer. Then, the results are further improved through a peer to peer energy sharing algorithm in which house pairs are selected if they can achieve better reductions in operating cost through a joint optimization process. Finally, the optimal settings for the selected couples are obtained. An effective sensitivity analysis for the proposed management system is also introduced to study the effect of the size and the efficiency of the Home Battery Storage, the size of the PV generation, and the average annual household consumption on the economic performance of the householders in the community. The results obtained are based on real historic data for several prosumers in a real community system. The results show that the proposed energy management system guarantees a further reduction in the annual household energy costs for each house (up to 8.96%) when being operated as a part of a community, compared to being operated individually.