Comparison of Centralized and Peer-to-Peer Decentralized Market Designs for Community Markets

Abstract

The rapid development of distributed energy resources has posed great challenges to the real-time balance between electricity supply and demand. A suitable market design not only solves the problem of balance but also maximizes social welfare. This article compares two typical community market designs: a centralized manager-based energy market and peer-to-peer (P2P) energy trading that is based on the continuous double auction. First, both market designs and network security verification are presented. Then, in case studies, we quantitatively compare these two market designs in terms of social welfare, the total payment, and the energy trading volume. It is shown that the manager-based energy market facilitates trading energy within the community and with external communities if necessary, but this market design requires collecting information on every market participant to formulate and solve a centralized optimization problem. In contrast, for an energy self-sustaining community, P2P energy trading might be a superb design because it is decentralized, flexible, and privacy-preserving. Meanwhile, with <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">ex post</i> security verification, P2P energy trading can also guarantee the secure operation of the network.