An Energy Sharing Mechanism Considering Network Constraints and Market Power Limitation

TL;DR

This paper proposes a novel energy sharing mechanism for prosumers that considers network constraints and market power, ensuring fair, stable, and near-optimal market outcomes with practical implementation and validated results.

Contribution

It introduces a market model with price regulation to prevent market power abuse and guarantees a unique, socially near-optimal equilibrium in energy sharing among prosumers.

Findings

Market equilibrium has desirable properties in large markets.

Price regulation ensures existence and uniqueness of equilibrium.

Experimental results validate theoretical properties and practical applicability.

Abstract

As the number of prosumers with distributed energy resources (DERs) grows, the conventional centralized operation scheme may suffer from conflicting interests, privacy concerns, and incentive inadequacy. In this paper, we propose an energy sharing mechanism to address the above challenges. It takes into account network constraints and fairness among prosumers. In the proposed energy sharing market, all prosumers play a generalized Nash game. The market equilibrium is proved to have nice features in a large market or when it is a variational equilibrium. To deal with the possible market failure, inefficiency, or instability in general cases, we introduce a price regulation policy to avoid market power exploitation. The improved energy sharing mechanism with price regulation can guarantee existence and uniqueness of a socially near-optimal market equilibrium. Some advantageous properties are proved, such as prosumer's individual rationality, a sharing price structure similar to the locational marginal price, and the tendency towards social optimum with an increasing number of prosumers. For implementation, a practical bidding algorithm is developed with convergence condition. Experimental results validate the theoretical outcomes and show the practicability of our model and method.