Peer-to-Peer Joint Electricity and Carbon Trading Based on Carbon-Aware Distribution Locational Marginal Pricing

Abstract

This paper proposes a novel Peer-to-Peer (P2P) joint electricity and carbon (E&C) trading model to co-optimize the energy and carbon emissions permit transactions considering the trading preferences in the distribution network. To realize the secure and low-carbon network operation, a decomposable carbon-aware distribution locational marginal pricing (CDLMP)-based operation service pricing scheme of the distribution system operator (DSO) is proposed to guide the P2P transactions among prosumers. In practice, the coordination between the P2P market and the DSO is cast as a bi-level optimization. In the upper level, the network operation optimization of the DSO is modeled as a carbon-aware optimal power flow (COPF) problem based on a carbon emission flow model to ensure the security of network operation and derive the CDLMP. In the lower level, a decentralized P2P joint E&C trading is modeled to simultaneously clear energy and carbon permit. Later, this paper develops an <italic xmlns:mml="http://www.w3.org/1998/Math/MathML" xmlns:xlink="http://www.w3.org/1999/xlink">l</i> (p)-Box ADMM method to relax the binary variables originating from the peer-matching process of the carbon trading. Finally, a novel demurrage protocol is designed to facilitate the convergence of the bi-level interaction with an incentive for trading adjustments. Case studies illustrate the effectiveness of the proposed method in motivating “grid-friendly” and “low-carbon” P2P trading.