Decentralized Transactive Energy for Flexible Resources in Distribution Systems

The increasing penetration of proactive agents in electric power distribution systems calls for mechanisms to coordinate their trading activities. The commonly employed centralized and distributed methods for supply-demand coordination are not only limited by hardware requirements but also restrictive for active participation of the market agents. This paper proposes a novel decentralized transactive coordination framework that allows participants to bid and clear transactions via a bilateral interaction process. The framework is based on 1) power consumption flexibility individually reported by demand agents using model-predictive control, 2) bilateral supply-side bidding individually determined by the supply agents using a Markowitz Portfolio Optimization model, and 3) individual simultaneous clearing of transactions by demand agents based on second-price sealed-bid auctions. The suppliers bid in the market to achieve desired returns while minimizing their risks. The demand agents harness their demand flexibility by competitively clearing the supplier bids. Unlike traditional approaches, the proposed framework does not require master nodes to orchestrate transactions and, therefore, facilitates massive participation of market agents. Simulation cases demonstrate that the proposed framework successfully performs the market function for bilateral transactions among thousands of proactive agents.