Incentive-based Peer-to-Peer Distributed Energy Trading in Smart Grid Systems

This paper studies incentive-based peer-to-peer (P2P) energy trading between sellers and buyers in a smart grid distributed system. When designing an energy trading model the main goal is to maximize the social welfare of the involved parties. Peer-to-peer energy trading is a novel mechanism of power system operation which allows users to generate and trade renewable energy. Buyers are considered to be consumers and sellers are considered to be prosumers (producers and consumers of energy) with respect to time. Buyers are more motivated to purchase energy from the seller since the energy was generated from a green source and is typically cheaper than the main grid. Furthermore, by producing clean energy and distributing within small networks, the transmission line stress is mitigated since the overall demand required from the main grid is reduced. In this paper, we model the interaction as single-sided auction taking into consideration the grid infrastructure constraints (e.g capacity) and cost while maximizing the profit of the players. We assess through theoretical analysis and simulations the bidding properties including individually rational, truthful, computationally efficient, and fairness.