An Effective Pricing Mechanism for Electricity Trading Considering Customer Preference and Reserved Price in Direct P2P Electricity Market Under Uncertainty in Grid Supply

Abstract

Meeting electricity demand by the generation of electricity from locally distributed energy sources has gained much success over the years. Among different frameworks for such renewable generation and consumption, peer-to-peer (P2P) markets have proved to be an efficient solution. As the pricing mechanism is an integral part of P2P markets, optimal price determination for electricity trading that ensures the profitability of the participants is the key to success in such markets. In addition to profitability, the pricing mechanism should be able to incorporate users' reserved prices and grid supply uncertainty to be implementable in developing countries. To achieve this objective and based on participants' preferences, an effective game-theoretic model is proposed to formulate the trading pairs among consumers and sellers. Then, keeping in view the participants' reserved prices for electricity trading, an effective and novel method based on the game-theoretic approach is proposed to determine the electricity price in the direct P2P electricity market. The proposed model is evaluated on a market having 22 participants. Among these, 11 participants act as electricity consumers, and the other 11 act as sellers. Simulation results show that the proposed algorithm is more effective as it further reduces the electricity bills for consumers from 5% to 8% and increases the revenues of sellers from 13% to 15% as compared to other proposed mid-range auction and uniform pricing models.