Embracing Fairness in Consumer Electricity Markets using an Automatic Market Maker

TL;DR

This paper proposes a novel market design for consumer electricity markets that uses an Automatic Market Maker and a Fair Play algorithm to enhance perceived fairness and efficiency, validated through a year-long empirical study.

Contribution

It introduces a new market mechanism combining an AMM with a Fair Play algorithm to improve fairness and efficiency in energy markets.

Findings

System performs well over 1 year with 101 households

Outperforms classical market approaches in fairness and efficiency

Demonstrates practical viability of the proposed design

Abstract

As consumer flexibility becomes expected, it is important that the market mechanisms which attain that flexibility are perceived as fair. We set out fairness issues in energy markets today, and propose a market design to address them. Consumption is categorised as either essential or flexible with different prices and reliability levels for each. Prices are generated by an Automatic Market Maker (AMM) based on instantaneous scarcity and resource is allocated using a novel Fair Play algorithm. We empirically show the performance of the system over 1 year for 101 UK households and benchmark its performance against more classical approaches.