Optimal Network Charge for Peer-to-Peer Energy Trading: A Grid Perspective

Abstract

Peer-to-peer (P2P) energy trading is a promising market scheme to accommodate the increasing distributed energy resources (DERs). However, how P2P to be integrated into the existing power systems remains to be investigated. In this paper, we apply network charge as a means for the grid operator to attribute transmission loss and ensure network constraints for empowering P2P transaction. The interaction between the grid operator and the prosumers is modeled as a Stackelberg game which yields a bi-level optimization problem. We prove that the Stackelberg game admits an <i>equilibrium</i> network charge price. Besides, we propose a method to obtain the network charge price by converting the bi-level optimization into a single-level mixed-integer quadratic programming (MIQP) that can handle a reasonable scale of prosumers efficiently. Simulations on the IEEE bus systems show that the network charge mechanism is favorable as it can benefit both the grid operator while securing the prosumers&#x2019; profit, and achieves <i>near-optimal</i> social welfare. Moreover, the results show that the presence of energy storage will make the prosumers more sensitive to the network charge price changes and impact the P2P market.