Peer‐to‐peer local electricity market platform pricing strategies for prosumers

Abstract

Peer-to-peer (P2P) energy trading in the local electricity market (LEM) handles local energy trades among prosumers connected to the same distribution network. LEM is governed by prosumer's individual choices, self-management and neighbourhood interactions. This study investigates the design of P2P LEM platform based on sharing economy for non-professional prosumers and provides an exposition towards conceptual integration of LEM in the existing market. Design features of the P2P platform are based on two-sided matching market theory. Here, P2P platform provider, i.e. an aggregator, operates a two-sided market platform to match and set prices for prosumers having different willingness to buy/sell. The economic rationale of the P2P platform is highlighted by a variety of pricing strategies that the aggregator could offer, focusing on the benefits of aggregator and prosumers. As the total number of trades among peers is a crucial factor to determine aggregator profitability, pricing with a capability to induce prosumer surplus acts as an instrument for the aggregator to bind prosumers in P2P LEM.