Energy trading between microgrids towards individual cost and social welfare optimization

Abstract

High penetration of renewable energy source makes microgrid (MGs) be environment friendly. However, the stochastic input from renewable energy resource brings difficulty in balancing the energy supply and demand. Purchasing extra energy from macrogrid to deal with energy shortage will increase MG energy cost. To mitigate intermittent nature of renewable energy, energy trading and energy storage which can exploit diversity of renewable energy generation across space and time are efficient and cost-effective methods. But a storage with large capacity will incur additional cost. In addition, due to MG participating energy trading as prosumer, it calls for an efficient trading mechanism. Therefore, this paper focuses on the problem of MG energy management and trading. Energy trading problem is formulated as a stochastic optimization one with both individual profit and social welfare maximization. Firstly a Lyapunov optimization based algorithm is developed to solve the stochastic problem. Secondly the double-auction based mechanism is provided to attract MGs' truthful bidding for buying and selling energy. Through theoretical analysis, we demonstrate that individual MG can achieve a time average energy cost close to offline optimum with tradeoff between storage capacity and energy trading cost. Meanwhile the social welfare is also asymptotically maximized under double auction. Simulation results based on real world data show the effectiveness of our algorithm.