Peer-to-peer electricity markets risk analysis: Assessing the impact of utilizing local storage as a risk mitigation mechanism

Abstract

Prosumers, who both produce and consume electricity will play a critical role in the future of electricity markets; however, they confront the associated risks of actively participating in P2P markets. Implementing mechanisms and technologies that decrease the market risk of household communities, will increase the tendency of prosumers to participate in P2P markets. The impact of utilizing local storage within a community of households on the risk-adjusted benefit of the prosumers has been quantified, analyzed and investigated in the present study. To address this issue, a two-stage market mechanism was proposed, in which a group of prosumers trade electricity through a P2P market scheme while can use their own renewable electricity production and local storage. The two-stage optimization problem of resource allocation has been solved for a one-day time horizon and a one-hour time step. A SARIMA time series model has been implemented to generate intra-day scenarios, addressing the stochastic behavior of renewable generation. We found that implementing the P2P trading and local storage simultaneously, decreases the community electricity cost by 36 % and increases the risk-adjusted benefit of prosumers by 13 %. Moreover, utilizing local storage, as an individual solution will result in a 5.9 % reduction in community risk when the P2P market is implemented. In other words, we have shown that local storage is a feasible solution to mitigate the risk of P2P markets and increase the desirability of active participation in such markets from the prosumers’ point of view.