Prosumer Centric Flexibility Market with Geometric Brownian Motion Pricing Method

As the distributed renewable energy and smart meters develop rapidly, the value of flexibility from the prosumers' end gets more attention. However, the heterogeneous nature of flexible household devices is often overlooked. Neither their unique physical feature nor their impact on users' comfort level is investigated. Besides that, the flexibility providers are often treated as price takers. They do not show market power during the pricing period. In this paper, we propose a prosumer-centric competitive day-ahead flexibility market. Based on the Monte Carlo method, the Geometric Brownian Motion is used to simulate the price path to determine the value of flexibility as a commodity. With a naïve seasonal neural network, the Home Energy Management System generates flexibility bids locally and submits them to the market while considering prosumers' comfort level as an important constraint. A series of household consumption profiles from Germany is used as a study case. The simulation results show that the proposed flexibility market is capable of providing service for the distribution system operator. The market can also provide a financial benefit for prosumers.