A motivational local trading framework with 2-round auctioning and settlement rules embedded in smart contracts for a small citizen energy community

Abstract

We propose a motivational local trading framework with a 2-round auctioning system and a novel settlement approach to stimulate local transactions on the electricity surplus of a small community. Two auction price systems and several settlement mechanisms are formulated and compared to assess local trading profit and local market efficiency. We also implement a SC-based mechanism that embeds the auction results and rules to increase trust in the bidding and settlement processes. Our simulations use actual consumption and generation data from 11 houses with smart appliances and self-generation capabilities. We show that auctions, if used consistently, can help the development of a local trade by encouraging people to buy from their neighbors and invest in more generating facilities, knowing that there is a local market on which to rely. Compared to the hybrid - Pay-as-Bid (PaB) in the 1st round plus Uniform Price (UP) in the 2nd round - approach, the pure 2-round UP auction was shown to decrease trading with the retailer by 7.5%. The market indicators are quite similar for the two pricing methods, whereas the proposed settlement mechanism reduces the buyers' payments by 7% and increases sellers' encashments by around 8%.