Compensation Mechanisms for Double Auctions in Peer-to-Peer Local Energy Markets
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ENERGY MARKETS (R SIOSHANSI AND A MOUSAVIAN, SECTION EDITORS)
Compensation Mechanisms for Double Auctions in Peer-to-Peer Local Energy Markets Christoph Gerwin1 · Robert Mieth2,3 · Yury Dvorkin2 Accepted: 6 October 2020 © Springer Nature Switzerland AG 2020
Abstract Purpose of Review This paper compares different double-auction pricing mechanisms in the context of peer-to-peer trading in local electricity markets. Benchmarking against the traditional system marginal price (SMP) approach, we analyze the outcomes of the Vickrey-Clarke-Groves (VCG) and Pay-as-bid (PAB) approaches, which lead to a revenue imbalance in the market. To mitigate this imbalance, we propose a set of mechanisms that impose trading fees or subsidies with different fairness policies and discuss their impact on the behavior of market participants.
Recent Findings Proliferation of small-scale and distributed energy resources in low-voltage distribution systems has spurred the development of platforms for peer-to-peer local electricity trading. While recent studies prove that local electricity trading can be beneficial to both the peers and system, implementation of local energy markets is still in the early stages and there is no consensus on an optimal market design. Summary This paper provides a detailed description of market properties for a competitive LEM that is cleared using the SMP, VCG, and PAB approaches. We show that the proposed compensation mechanisms effectively enforce predefined fairness policies and derive exact payments for each peer depending on market results and individual peer characteristics. The case study uses real-world data to illustrate that different compensation mechanisms can be used to incentivize desirable peer behavior, e.g., installation of new distributed energy resources, investment in grid supportive generation, or flexible energy usage. Keywords Local energy markets · Peer-to-peer energy trading · Double auctions · Pricing mechanisms
Introduction With the proliferation of distributed energy resources (DERs) and digital, communication-based control systems (e.g., smart meters, smart appliances), there has been a growth of independent, small-scale power producers, and This article is part of the Topical Collection on Energy Markets Yury Dvorkin
[email protected] 1
Workgroup for Infrastructure Policy, Technische Universit¨at Berlin, Straße des 17. Juni 135, Berlin, 10623, Germany
2
Tandon School of Engineering, Department of Electrical and Computer Engineering, NYU, Brooklyn, NY 11201, USA
3
Control Systems Group, Technische Universit¨at Berlin, Einsteinufer 17, Berlin, 10587, Germany
flexible loads in low-voltage distribution systems, including behind-the-meter resources. Yet, existing wholesale electricity markets, which traditionally deal with largescale generation resources, struggle to enable an efficient market participation of individual DERs, thus hindering their potential. Obstacles for the integration of smallscale resources include lacking means for transmissiondistribution coordination an
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