Optimal Local Energy Trading considering Network Cost via Hotelling Game

With the high penetration of distributed renewable resources, local energy trading makes it possible to trade energy from local renewable sources, such as small-scale photovoltaics panels and wind turbines. In this paper, a novel Hotelling Game based local energy trading is proposed in this paper to determine the optimal strategies of the minimum total costs. Both network cost of transportation and energy cost of generation are considered in the trading decision-making. The network cost is determined based on the MW-Mile method to reflect the usage of the network in energy trading. The local trading is modelled as a Hotelling Game and the optimal trading strategies can be obtained for the customer to minimize their energy bill. The proposed energy trading method is demonstrated on a representative system to illustrate the significance of network cost in the local trading scenario.