Decentralized Energy Market Integrating Carbon Allowance Trade and Uncertainty Balance in Energy Communities

TL;DR

This paper proposes a decentralized energy market model that integrates carbon allowance trading and uncertainty management within energy communities, promoting carbon neutrality and efficient market clearing.

Contribution

It introduces a novel joint trading framework combining peer-to-peer energy trading with carbon allowance sharing and uncertainty hedging, solved via a decentralized optimization method.

Findings

Effective market clearing validated by numerical results

Successful integration of carbon trading with energy exchange

Decentralized solution approach enhances scalability and privacy

Abstract

With the sustained attention on carbon neutrality, the personal carbon trading (PCT) scheme has been embraced as an auspicious paradigm for scaling down carbon emissions. To facilitate the simultaneous clearance of energy and carbon allowance inside the energy community while hedging against uncertainty, a joint trading framework is proposed in this article. The energy trading is implemented in a peer-to-peer (P2P) manner without the intervention of a central operator, and the uncertainty trading is materialized through procuring reserve of conventional generators and flexibility of users. Under the PCT scheme, carbon allowance is transacted via a sharing mechanism. Possible excessive carbon emissions due to uncertainty balance are tackled by obliging renewable agents to procure sufficient carbon allowances, following the consumption responsibility principle. A two-stage iterative method consisting of tightening McCormick envelope and alternating direction method of multipliers (ADMM) is devised to transform the model into a mixed-integer second-order cone program (MISOCP) and to allow for a fully decentralized market-clearing procedure. Numerical results have validated the effectiveness of the proposed market model.