Incentive Mechanism for Cooperative Energy Sharing

Abstract

To improve the controllability and utilization of ubiquitous distributed energy resources (DERs), the concept of energy sharing has been advocated as a promising solution. Distinguished from the existing literature considering energy sharing in a non-cooperative game, an energy sharing scheme in a cooperative setting is presented, and an incentive mechanism is designed in this paper. In the energy sharing scheme, electricity consumers can flexibly share DERs with each other. Then consumers' net load demands are aggregated by an aggregator to trade with the connected power grid. The proposed scheme is aimed at maximizing the total benefits of the aggregator and electricity consumers. A Nash bargaining (NB) model is formulated to guarantee individual rationality of all market participants. In the NB model, an index, termed as aggregator's rate of return, is proposed to control the aggregator's revenues from the energy sharing. For practical implementation, the energy sharing scheme and the incentive mechanism are decentralized using alternating direction method of multipliers (ADMM). Case studies based on 10 electricity consumers in Austin, Texas show that the aggregator and electricity consumers can benefit from the proposed energy sharing scheme.