Market power modeling and restraint of aggregated prosumers in peer-to-peer energy trading: A game-theoretic approach

Abstract

The aggregator can be introduced to the community microgrid to facilitate small-scale prosumers participating in peer-to-peer (P2P) energy trading. However, when the aggregator performs price anticipation for profit with its market power, market trading fairness and efficiency of the P2P market may be harmed. To analyze the formation and negative effect of market power, this paper proposes a market power modeling and restraint method of aggregated prosumers with a game-theoretic approach. First, a framework for the P2P energy trading market with the aggregator is established, and the price impact factor is defined and introduced to characterize the impact of the aggregator's trading behavior on the market price. Then, the competition between the aggregator and individual prosumers is modeled as a non-cooperative game, and the impacts of market power on price formation, trading profit, and overall benefit are analyzed, respectively. Finally, the tentative offers penalty is introduced in the market to restrain the market power of the aggregator. Numerical results show that the aggregator can take advantage of its market power to manipulate the market price for profit when the value of the price impact factor is well perceived, which may harm the fair distribution of welfare among prosumers and the overall benefit of the microgrid. Meanwhile, the results also prove that the involvement of the tentative offers penalty can restrict the market power perception ability of the aggregator and further restrain the impact of market power on the benefit of the market.