Risk management framework of peer-to-peer electricity markets

Abstract

Due to the acceleration of energy transition from fossil fuels to Distributed Energy Resources (DERs), the structure of the power industry (mainly generation and distribution) is changing. The emergence of the smart grid concept and Peer-to-Peer (P2P) electricity markets make local producers and consumers face new challenges and risks. Managing the risks that the participants in P2P markets are encountered is necessary to guarantee a sustainable penetration of such markets. This article provides a comprehensive risk analysis by implementing a proposed risk management framework to address the identification, classification, assessment, and mitigation of all risks that prosumers will face when participating in a P2P electricity market. The main risk factors have been investigated in an elaborated way through risk assessment and preliminary suggestions for risk mitigation. Ten risks have been identified and categorized into three main groups. The proper potential responses are addressed for each assessed risk to mitigate the impact of risk associated with participation in the P2P electricity market. Studying the risks from a prosumer's point of view, considering management of those risks in the context of micro-grid scheduling/optimization, and designing the mechanism of the P2P electricity trading market will enhance the acceptance of participating in these markets. Moreover, further research opportunities and directions regarding risk management concepts in P2P electricity markets are discussed.