Energy security is pivotal for reliable and sustainable socio-economic development. Recently, the generation and consumption of renewable energy have become key drivers to enhancing global energy security. Likewise, the current power system is undergoing a significant transformation towards renewable energy not only to improve energy security but also to reduce greenhouse gas emissions and improve sustainability. This has resulted in intense research and installation of distributed energy resources (DERs) like wind turbines and solar cells.
The large-scale installation of DERs enhances effective energy consumption management and flexibility as it uses localized renewable energy well. Consequently, it benefits the grid and the DER owners, who can sell their excess energy for profits. DER investment has been encouraged by implementing tariff-based schemes, which despite holding great potential, have been criticized for being less competitive and offering limited benefits. As an alternative, peer-to-peer (P2P) energy trading marketing consisting of P2P service providers and energy buyers and sellers has been fronted as a promising model in the energy sharing market.
In a P2P market, both peers can buy/sell to achieve financial gains and flexible energy management without the involvement of utility companies. Energy storage devices like batteries remain a vital component of the residential P2P energy trading market. Despite the environmental and economic benefits of P2P market, the high investment costs of batteries remain a barrier. Although shared energy storage (SES) scheme has been deemed an effective business model due to the benefits of economy of scale, there is still a limited understanding of residential P2P energy markets embedded with SES. Moreover, there are a number of research gaps related to the physical factors, stakeholder structure and pricing mechanism that affect the successful implementation of the P2P market.
On this account, PhD candidate Boshen Zheng, Professor Wei Wei and Professor Shengwei Mei in collaboration with Professor Yue Chen from The Chinese University of Hong Kong and Professor Qiuwei Wu from Technical University of Denmark proposed a novel P2P energy trading market embedded with residential SES units. These units were installed on the energy consumer side and all the participants were considered self-interested and rational in terms of their decisions to buy/sell energy amongst their peers. The market participants and market equilibrium as well as the feasible equilibrium solution strategies, were modeled. The work is published in the journal, Applied Energy.
The authors showed that the implementation of SES could provide more flexible energy consumption strategies for both energy buyers and sellers, as illustrated by the market equilibrium problem consisting of two intertwined games. The first game between energy buyers and sellers was described as non-cooperative, considering the conflicts between these two groups. The second game that comprised energy buyers/SES users was described as a generalized Nash equilibrium problem based on the scarcity of the SES resources. The interactions between the two games led to the problem equilibrium, resulting in endogenous allocation of SES storage capacity and determination of the P2P transaction price.
The market equilibrium problems were solved using Karush-Kuhn-Tucker (KKT) optimality conditions derived from the optimal problems of all the participants coupled with linearization techniques. After concatenating together all the conditions, the market equilibrium was cast as a mixed-integer linear program, where the SES capacity allocation and P2P transactional prices were also determined from the market equilibrium. The P2P2 prices were also influenced by the demand and supply relationships, and they reflected the value of the energy resources. Furthermore, introducing SES could reduce costs and ensure fairness in capacity allocation.
In summary, the design of a P2P energy trading mechanism embedded with SES units for residential consumers and local DERs owners considering the energy pricing mechanisms and stakeholder structure was reported. The benefits of this business model for the transactive energy market included enabling sharing of excess energy with peers, improved competition, improved energy consumption management, higher financial benefits, and enhanced energy security. In a statement to Advances in Engineering, the authors explained that P2P energy trading benefits all participants and is a promising business model for improving the consumption of local renewable energy and overall energy security.
Zheng, B., Wei, W., Chen, Y., Wu, Q., & Mei, S. (2022). A peer-to-peer energy trading market embedded with residential shared energy storage units. Applied Energy, 308, 118400.