Pricing in Peer-to-Peer Energy Trading Using Distributed Optimization Approach

Abstract

A local energy trading in a community microgrid is one of the emerging concepts in the area of distribution networks. A proper business model is required to manage the local energy trading. A peer-to-peer (P2P) energy trading model is considered as one of the suitable models to manage local energy trading in a community microgrid. The pricing mechanism is crucial in P2P energy trading because energy price is a key factor in determining the benefits of local energy trading. Designing a proper pricing scheme maintaining the privacy of the participants is a challenging task. This paper proposes a novel privacy preserving pricing mechanism for P2P energy trading in a community microgrid with prosumer and consumer households. An alternating direction method of multiplier (ADMM) based distributed approach is proposed to determine the energy price. The proposed method solves the energy pricing problem for P2P energy trading with minimal exchange of information among the agents participating in the trading. The simulation results have shown the proposed distributed approach of energy pricing in P2P energy trading is feasible.