Consensus-based Approach to Peer-to-Peer Electricity Markets with Product Differentiation

Abstract

With the sustained deployment of distributed generation capacities and the more proactive role of consumers, power systems and their operation are drifting away from a conventional top-down hierarchical structure. Electricity market structures, however, have not yet embraced that evolution. Respecting the high-dimensional, distributed and dynamic nature of modern power systems would translate to designing peer-to-peer markets, or at least to using such a structure in the background for a bottom-up approach to future electricity markets. A peer-to-peer market structure based on a Multi-Bilateral Economic Dispatch (MBED) formulation is introduced, allowing for multi-bilateral trading with product differentiation, for instance based on consumer preferences. Consequently a Relaxed Consensus+Innovation (RCI) approach is proposed to solve the MBED in fully decentralized manner. A set of realistic case study analyses shows that such peer-to-peer market structures can effectively reduce externalities on power systems with a limited cost increase compared to centralized market approaches. Additionally, the RCI solving approach allows for a fully decentralized market clearing which converges with a negligible optimality gap, with a limited amount of information being shared